Medical expenses can become a huge burden if you aren’t prepared. Even if you think you are prepared, filing bankruptcy may be the only way to handle the medical bills from a catastrophic illness.

If you are having trouble making the minimum payments on your credit card bills, or if your creditors are threatening you with legal action, it is time to consider all your options.

You may think of bankruptcy as a dirty word. Filing bankruptcy in Texas provides protection for your home, many of your personal belongings and retirement savings.

If you have over $10,000 in credit card debt that you are struggling to keep up the payments on, you should contact a Dallas/Fort Worth bankruptcy attorney.

Before changes to bankruptcy laws in 2005, creditors argued that consumers abused their right to discharge debt. Currently, however, most experts agree that the economy is the phenomenon at work — job losses, cut backs, medical problems, and family breakups have effected people who were otherwise living within their means.

According to the American Bankruptcy Institute, 98,344 consumers filed for bankruptcy protection last month, with a projected 1.4 million for the rest of 2009. Even business bankruptcies are on the rise.

As people run out of credit, they turn to bankruptcy. But economic stimulus packages and other government interventions may provide some relief to the credit markets, which may slow the rate of filings.

As you work with your bankruptcy attorney to improve your finances, a budget can keep you moving forward.  Let’s look at common reasons budgets fail, and how to make a budget your friend instead of your enemy.

1. Unrealistic expectations. Don’t start a budget in the land of “should”…I should be able to live on this; this should be enough for groceries; I should be able to eat every meal at home. Sound unrealistic?  For a budget to work, it must start in reality, where you are today.  For the next 30 days, write down everything you buy and what it costs, from 50¢ for a soda to your housing.  Then add all your expenses up, breaking them down into categories:  eating out, groceries, dry cleaning, utilities, payments on existing debt, gasoline, kids’ lunch money, home maintenance, etc.  This is your “Monthly Expense Sheet” First Draft.

2. Lack of planning. You’ll have expenses later in the year that didn’t come up in your 30 days, right?  Like birthday gifts, inspection and registration for your car, summer camp, auto repair.  Take some time to plan; think of everything you might spend money on in the next 12 months. Make a list, and realistically estimate what you might spend on each.  For gift giving occasions, be sure to include the name of each person and how much you plan to spend. This is your “Periodic Expense Sheet” First Draft.

3. Lack of Discipline. For each Periodic Expense, divide it by 12.  That’s how much money you need to set aside each month to be ready for that expense.  If you listed “Auto Repair $240/year = $20/month” then add a line to your “Monthly Expense Sheet” that reads “Auto Repair $20/month.” Put that same info on an envelope and each month, tuck $20 into it. Be disciplined: only use that for auto repairs.  Do this for each of the item you transfer from your “Periodic” to your “Monthly Expense Sheet.”

4. Budget Deficit. If you’re like most people, when you add up everything on your “Monthly Expense Sheet,” your total is more than you bring home.  That’s a budget deficit.  But don’t despair!  It’s labeled “First Draft” because you’re not done yet.  This is where the work begins.  Reduce your expenses.  Keep telling yourself, “If I want my finances to change, I have to make changes.”  How much could you save if:  Everyone in the family brown-bagged it for lunch? You downsized or eliminated your cable service? You only bought meat at the grocery store when it was on sale? You lowered your thermostat in winter by 2 degrees (and raised it by that much in summer)? You drew names for a gift exchange at major holidays instead of buying for every adult in your family? You carpooled with a coworker?  Don’t be defeated by a budget deficit!  Be emboldened by it…get courageous and creative.

5. Missing Your Treasure. Take a good look around your home, behind closed doors and cabinets. You probably have “stuff” other people might buy. For maximum profit, use garage sales as a last resort. Start with eBay and Craig’s List.  Use the extra cash you make to pay down debt.

6. Forgetting the Mission. Your bankruptcy attorney’s mission is to help you improve your financial future.  Don’t sabotage that mission by spending money on things you don’t need, like the latest electronics or expensive vacations.  Keep the mission in mind: making changes today that will change your family’s future forever!