Finances affect everyone. Personal and corporate finance focuses on two major areas, income and debt. Income finance is budgeting how to spend and invest incoming cash flow while debt financing is concerned with applying for loans, securing them, and also the area of bankruptcy. Seeing green on a spread sheet is always encouraging but having some of the red blended in a measured fashion with the tapestry of the financial structure of a individual or a business can also advance someone forward.

Leveraging money through borrowing against assets and credit worthiness, i.e. signature loans, is a constructive way of expanding a business. Some times people fall into the mind set that all borrowing is detrimental. That is not the case. There are multiple small business owners who with the combination of a great idea, hard work, and a little financing accomplished huge goals, built solid businesses, and secured good futures for their families.

One wise approach is to only borrow against things that do not depreciate. Borrowing on a home that is going to appreciate over time is a good investment. Also for expensive assets, such as a home, it may be necessary to borrow. One smart option is to save a substantial sum and make a large down payment. Also, purchasing a home that can be paid off over 10 or 15 years verses 30 is also a wise way to minimize interest expense but still purchase your own home.

Purchasing a home that falls within someone’s budget typically does not force them into bankruptcy when times get tough. What tips someone towards personal or corporate disaster is when other debts such as credit cards are accumulated. When someone applies for a standard home loan, all of their financial records are poured over and evaluated by a lender. Balance sheets of income and expenditures are examined to determine what a consumer can afford on their monthly income.

But with credit cards it is fairly easy to just fill out a short questionnaire and then send it back to the company. Many times the application will be approved based on credit scores and other credit data. This puts it in the hands of the consumer to be sure not to spend more than they can repay on the card.

Other loans such as high car payments, credit lines on homes, and medical bills can stack up and in the end the person has literally no way to make all of the payments. In times with a struggling economy it can be almost impossible to get a second job and the primary job can also be threatened with things such as wage freezes, lack of bonuses, and removal of overtime.

Sadly, some people’s only option is bankruptcy. In our current recession in the United States it has proven to be the worst economy in 70 years, since the Stock Market Crash of 1929. People like to exaggerate economic data, but this is a true statement made by more than one individual about the current financial situation of the United States. In November of 2009 more than 1.3 million American had to file for bankruptcy. The economy is slowly improving, but where does that leave people who are struggling and facing financial ruin? Well, there are still some options.

Bankruptcy, though a choice that no one wants to have to make, does provide a way to wipe away debt and stop the hounding of creditors. But before someone makes a decision there are a few things to consider. First, there are two different types of bankruptcy for individuals: Chapter 7 and Chapter 13. The two main differences between the two is one allows for the discharge of all of the debt and the other only allows the discharge of some debt and forces the repayment of some or all of it. The main ingredient that dictates which one someone qualifies for is income. For low income households a full discharge of debt is possible, but higher income households may be required to repay the debts.

In the over all picture, though a bankruptcy or foreclosure stays on one’s credit report for 10 years, it is better to have a bankruptcy than a foreclosure on record. One thing to consider might be a refinance with bad credit. A refinance may provide access any equity in the home and also may reduce an interest rate and clear finances faster. It may be less expensive to take a lower interest second mortgage and use the funds to pay off a higher interest credit card bill.

If someone is forced to go through bankruptcy it is very important to make careful plans with finances after bankruptcy filing. To help reestablish creditworthiness it is necessary to make sure all bills are paid on time for the first two years. Another good option is to get a prepaid credit card, charge to it and pay it off regularly. Once 24 months have passed some borrowers may have the option of a bankruptcy home loan. This is a special home loan provided by the Federal Housing Administration, FHA, and is designed for people who have gone bankrupt. If someone has a foreclosure on their history then they should wait until three years after filing for bankruptcy.

Though tough times come, there are still avenues for people to pick up the fragments and begin again. Bankruptcy may actually be the best avenue, depending on how deeply in debt someone it. Before deciding to file, it is in the borrower’s best interest to secure the services of an attorney who specializes in bankruptcies. Personal and corporate finance is a complicated field and should be approached with a professional by your side.