'Back-in-the-day', as they say, when I was a young lad in my early twenties, I was given some fundamental advice on getting all I could out of life. It didn't make a whole lot of sense to me then, since it actually went against everything I'd experienced up until that time. 'Debt', as I was told, was now the preferred means of rapid asset acquisition and even good credit, no less, which meant approval for even more debt. The experts were preaching 'the more debt, the better'. It provided the opportunity to acquire and new home, a new car, new furniture, new appliances, and exotic vacations, to name just a few. It didn't make sense to me, simply because I knew it had taken my father and grandfather nearly a lifetime to purchase some of those things, since they had to save nearly all of the cost before even considering the purchase. So I'm thinking, "what is going on with this new approach to financial freedom?" And, exactly what kind of 'leverage' is it that I'm creating with this ownership of massive debt?

Frankly, I never totally bought into that revolutionary new philosophy. I settled instead for a much less stressful lifestyle, where paying off my credit card each year, utilizing my long awaited federal tax refund, was challenging enough. I simply never understood the life of constant worry over debt service that so many were willing to sign up for, just to have a few bigger and more expensive things.

The revolution may have started with my generation in the 1960s, but it gained enough momentum to become what had to be considered a national crisis. With debt and bankruptcy reaching all-time highs, and savings virtually non-existent, it became quite obvious to me that this so-called 'debt leverage' needed some rethinking. The truth is that using debt to create prosperity was a myth aimed at the working class. The fact is that the 'wealthy' had a much better understanding of the risks and never used that method nearly as much as we were led to believe.

According to a recent USA Today article about debt, 78% of Baby Boomers (my generation) have mortgage debt, 59% have credit card debt, and 56% have car payments. Financial expert, Dave Ramsey recently offered this observation: "Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you're in debt, then you're a slave because you do not have the freedom to use your money to help change your family tree. It takes a lot of will, discipline, courage and help to slay the debt monster. But it can be done. Imagine how much you could put toward retirement if you just didn't have a stinking car payment."

The myth was that we should use OPM (other people's money) to gain prosperity. While that style may work for some, the average John Doe simply doesn't have the expertise, discipline or patience to make it a viable strategy. Ideally, when exposed to debt-promoting hype, one should always consider the risk. It's seldom that the advantages of newly acquired assets outweigh the risks associated with the additional debt.

So, what happens when the debt is so out of control that it's turned your life into a living nightmare? The unfortunate reality is that stress and anxiety can ruin your health, devastate your job, destroy your marriage and steal your peace of mind. Not withstanding personal loans from family or friends, there are generally only two remaining options available to those who want to continue breathing: Bankruptcy or professional debt counseling.

One should not be fooled with the notion that bankruptcy is just a simple way to start over. The fact is that it's a life-changing event that can cause life-long damage. Very few who have been through the process would report that it's a painless wiping-clean of the slate. In fact, it's listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. It's an event that can leave very deep wounds both to the psyche and the credit report.

Chapter 7 is total bankruptcy, and involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. It stays on your credit report for 10 years. Chapter 13 is more like a payment plan, and allows you, if you have a regular income and limited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. However, it still stays on your credit report for seven years. Bankruptcy, regardless of the type, is for life. Loan applications and many job applications ask if you have ever filed for bankruptcy. Ever! If you lie to get a loan because your bankruptcy is very old, technically you have committed criminal fraud.

Fortunately, most bankruptcy cases can be avoided with proper help, such as certified professional counselors, and in the end will help to get your feet back on solid, credit worthy ground. The process will be painful, but bankruptcy, foreclosure, and lawsuits are much more painful.

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