Okay, this one's a good question, because a lot of people are finding themselves in this mess today. Have you ever played a game of Monopoly®, where you run out of money and can't pay the $2000 for landing on Boardwalk with 10 hotels on it? Pretty bad feeling, huh? Imagine if someone walked up to you and told you that you didn't have to pay the $2000. That might be a good thing, right?

Well, in a board game that might work, but for the rest of us living in real life, running out of money to pay your bills is bad. When it gets so bad that you have to decide to pay the phone bill or eat this month, some people look to declare bankruptcy.

What is bankruptcy?

In a nutshell, bankruptcy is when you go to court and ask a judge to tell all of the people and companies to who you owe money to go and take a hike, you don't owe them the money anymore. Whoa you say, that sounds way cool, where do I sign up? Well, wait just a second because it's not all that great. It's used as a last resort because bankruptcy can mess with your life for a long time. Even worse, if some of your debt was for a car or house, in some cases the court can order those things seized and sold to help pay the debt off a bit. It can even prevent you from getting some jobs. As you can see, bankruptcy isn't the free ride you thought it was.

Okay, now that you're scared a bit (and you should be), there are a couple of different kinds of bankruptcy:

Chapter 7 - Called "straight" bankruptcy, this is the scary situation I described earlier. You walk away from your pile of debts but you could lose your home, car, furniture, dog, etc (okay, maybe not the dog).

Chapter 13 - Called "reorganization", you agree to eventually pay off the debts over a number of years, usually 3 to 5. The upside is that you get to keep your stuff. Also, chapter 13 doesn't look as bad on your credit record as chapter 7.

Ready for a shocker? Utah is the bankruptcy capital of the country, with more declared bankruptcies per capita than any other state. And nearly a third of the bankruptcies in Utah are from individuals aged 18 - 25! That's you my friend in a few years! Yikes!

So how can you avoid this whole bankruptcy thing? Simple. Way simple. Don't get into too much debt in the first place. In fact, it's good to avoid debt at all cost. Save up for the things you want instead of putting it on a credit card. Don't spend more money per month than you earn. Stuff like that. Peace.

Did You Know?

In 2003, there were over 1.7 million bankruptcies declared in the United States