For the second time in three years, Hostess Brands (famous for producing Twinkies, Ring Dings, and Wonder Bread) has filed for Chapter 11 bankruptcy protection. According to CNNMoney.com, the company cited unmanageable expenses (largely in its employee pension plan) as its reason for needing bankruptcy again, after emerging from an earlier bankruptcy case in 2009.

The problem confronting Hostess Brands is similar to the ones that prompt many municipalities to file for bankruptcy protection: namely, that it cannot sustain the pension system it established many years ago.

Another problem Hostess Brands faces is the number of its creditors. Reports indicate that the junk food producer owes money to between 50,000 and 100,000 creditors – most of whom are former employees with pension plans. The sheer volume of creditors can make settling out of court difficult, and may have contributed to the company’s decision to choose bankruptcy.

Similar Problems Leading to Individual Bankruptcy?

While it’s easy to brush the problems faced by Hostess and many other large companies aside as unique to big businesses, the lessons from this giant-sized bankruptcy filing can provide important guidance for individuals. Here are some.

• Review your recurring expenses. If you’re struggling with paying your bills each month, it’s time to review what you’re paying for – and whether you’re getting your money’s worth. Cable and TV packages, cell phone plans (do you really need all those minutes?), and energy costs are all prime targets for cutting monthly costs and freeing up money to help you pay down debt. Downgrading to less luxurious entertainment and/or switching to energy-efficient light-bulbs and shower heads could save you significant money in the long term.
• Determine whether you can afford the services you’re paying for. Hostess doesn’t have enough money to pay its former employees. Do you have enough money to pay the people who work for you? If you’re looking to cut back on expenses, reevaluate your hair styling, manicures, lawn care, house cleaning, and any other services that you could cut back on or do yourself.
• Be wary of long-term service contracts. Cell phone providers are notorious for pushing customers into long-term service agreements. Credit card issuers and cable providers sometimes do the same. But unless you live in an area with no alternatives, don’t get sucked into an agreement that you might face penalties for trying to cancel, unless you’re positive it will benefit you for its duration.

Even if you end up filing for bankruptcy after making adjustments to your expenses, the process should prepare you for the type of living that will help you recover from bankruptcy, stick to your repayment plan (in Chapter 13 bankruptcy), and reestablish your credit so you can move forward and get past your debt struggles!