Finding yourself in a situation where you’re facing financial difficulty is never easy and will often lead to stress. In turn, stress can lead to some physical health conditions, so trying to keep your debt in check will be beneficial not only for your financial health but your mental and physical health too. Knowing the steps to take and understanding the process of bankruptcy will help with you if you’re struggling with it. Often, people that have never faced a financial struggle won’t know the process or how to deal with bankruptcy. So here we look at 6 steps to take when dealing with it.
Understand Bankruptcy
Firstly, it’s important you understand bankruptcy and what comes with it. Once you know the facts behind it you’ll be able to put into place some other steps to try and help you out of your situation. Filing for bankruptcy is a process that wipes your slate clean and allows you to have a fresh start. But this doesn’t mean it’s a simple process, there are positive and negative ramifications of going through the motions.
On the plus side, your debts will be cleared with your creditors. You’ll even be allowed to keep certain possessions that are essential like anything to do with your job, or even your car under certain circumstances. You’ll keep a percentage of your income and you won’t have to pay back the debts that bankruptcy covers.
However, there are a few more pressing negatives to consider. If you have a high income, then you’ll have to continue paying off or make payments towards your debt. The Professionals from BankruptcyCanada.com explain that getting a credit card or a loan will be very difficult for a minimum of the next six years. You’ll have to sell off most of your assets to make large payments toward any debt leftover and this includes your home.
Sell Your Assets
To get ahead of the game you can get together a large number of your assets that you don’t believe you need any more, whether that’s a large television or even another car you may have and sell it for the benefit of the debt. This could give you a little more time before having to file for bankruptcy and allow you a few months to claw yourself back to near financially healthy.
If you start selling things off to raise the money it will look good on you if you ever need to file for bankruptcy. The courts or the creditors can see you’ve done everything you can to try and raise as much money as possible in a short space of time so they might be more inclined to help you out.
Speak to Your Creditors
One thing that’s wise to do before making any rash decision is to speak to your creditors. If there is anyone that’s going to be able to help in the short term it’s them. Being open and honest about your situation will allow the conversation to be opened up to one that could potentially help you. Asking for a reduced payment rate or a reduced interest rate could give you enough time to get back on track and get back to making payments in full.
These companies don’t want you to go bankrupt as the debt will be wiped clean, they will want you to make payments for as long as possible. Talk to them first to see if there’s anything they can do.
Ask for Help
In most situations asking your friends and family to help you out financially is going to be a mistake. But if you’re in financial hardship, then it could be a good way to get yourself back on track. Look at how much money you can front toward your debt and then see if there’s anyone that will help you out enough to clear the rest. Having creditors off your back will alleviate stress and enable you to sort your finances out to pay them back. Make sure to write up a payment plan with your family member or friend to show them you’re serious about getting debt-free.
Reduce Your Monthly Expenses
If you have a number of subscriptions to things that aren’t essential in life, such as cable or a streaming service, then cancel them to allow the funds to go elsewhere. You can also try shopping at a cheaper supermarket and budgeting for a weekly shop instead of buying food every day.
Get a Second Job
Finally, before filing for bankruptcy, you should look to see what else you can do to earn more money. If you aren’t doing anything in the evenings and you’re free to work then try and get a second job to make up some extra cash. This will help with paying your debts quicker and allow you to get back on track before things get really out of hand.
Use all 6 of these tips in conjunction with each other to really make a dent in your debt. You don’t have to live your life stressing every day that someones going to knock on your door and repossess your assets. Take things into your own hands and make the difference on your own.