BANKRUPTCY UPDATES

• Monk's Personal Bankruptcy Case Gets Stranger (February 01, 2012)
• Bankruptcy Filings by Big Companies Falls by 17 Percent (January 26, 2012)
• Wrigley Field Rooftop Building Sold in Bankruptcy Auction (January 27, 2012)
• Former Flying Wallenda Files for Chapter 13 bankruptcy (January 31, 2012)
• Green Fuel Developer Evergreen Energy Files for Bankruptcy (February 03, 2012)

How to Tame the Debt Dragon

If you're being tormented by debt and its trappings (debt collectors, rising interest rates, plummeting credit scores, etc.), it's unlikely that a knight in shining armor will come to slay your debt while you cheer from the sidelines. But, medieval metaphors aside, you can take steps to eliminate debt without help from a man in a metal suit.

Here's a look at six important moves you can make to tame (or even slay) the vicious dragon of debt.

Get the lowest rates on everything.

Take a look at your credit card interest rates. If your rates are in the double-digits, consider calling your card issuer to negotiate for lower rates. This works best for long-standing customers and those whose accounts are in good standing, according to bankrate.com.

• Card Transfers: If you can't negotiate lower rates, consider transferring credit card balances to a card with a lower interest rate, but READ THE FINE PRINT on your new card agreement. Make sure the lower interest rate won't reset to cost you more.
• Non-Credit Card Rates: Credit cards bills aren't the only ones you can save on - call your cell phone service provider to ask for lower rates (threaten to take your business elsewhere). Investigate other household costs - sometimes energy costs less during non-peak hours, so you could save money by running the dishwasher or clothes dryer during a down time.
• Get Help: Not sure about those credit card agreements? Consider visiting a credit counseling service in your area or consulting with a bankruptcy lawyer to make sure you're making the best choice financially. Paying for this service now could save you thousands in unexpected interest rates.

Stop Feeding the Beast.

This one's easy: stop charging on your credit cards. As you shift your focus toward paying down your current debt, stop taking on new debt by charging unnecessary expenses. Consider hanging on to only your card with the lowest interest rate.

Ignore Minimum Payments.

Remember the Hydra, the mythological multi-headed beast that grew two new heads every time one was chopped off? That's kind of what happens when you only pay the minimum balance on your credit cards.

The minimum monthly payment covers only interest and a tiny bit of the principal amount, so the rest of your balance keeps accruing interest, thus getting bigger and bigger. Pay more than the minimum each month, and you'll start to see your principal balance go down.

Live with a Budget.

For detailed tips on how to develop and stay with a budget, check out this page on what happens after filing bankruptcy. Here are some basic pointers.

• Write down everything you spend for a month, see where your money's going and find areas to cut back.
• Go for low-cost options whenever possible: fewer TV channels, no high-speed Internet (public libraries usually have free web access), home-prepared food & drinks, etc.
• Avoid impulse buys/plan ahead. This keeps you from spending money unexpectedly.
• Use lists for shopping trips. Stick to them.

Set up an Emergency Fund.

Yes, you can (and should) start saving before your debt's completely paid off.

Start a new savings account or add to an existing one. Aim to have three months' expenses socked away. Save in baby steps (as little as $5 a week) and watch it grow. This "safety net" will help you stay out of debt if a medical emergency, job loss or a family crisis arises - you won't have to rely on credit to tide you over during rough times.

Know Your Rights!

As a consumer, you are protected by a variety of U.S. laws. Read up on some major consumer protection laws so you have an idea what you can expect from debt collectors, lenders and others.

Remember that the U.S. government offers bankruptcy protection for a reason - if you cannot realistically eliminate your debt in any other way, filing bankruptcy allows you to get a fresh start on your finances. To learn more about Chapter 13 bankruptcy and Chapter 7 bankruptcy, read over the Total Bankruptcy website or talk with a bankruptcy lawyer.