No one ever wants to file for bankruptcy but sometimes it looks like it is the only way to put an end to your financial woes. Once you have filed the paperwork and have been officially declared as bankrupt, any excess savings that you have and valuable assets will be seized in order to repay your loans and debt. If these savings and assets aren’t enough to repay the full value of the debt, then all of the debts and loans will be canceled.
However, claiming bankruptcy should be the very last step, as it will be a permanent mark on your credit history. So, it could prevent you from being granted any credit in the future. Not only that, though, but there will be a period after your bankruptcy during which you will be prevented from setting up your own business. So, you need to take all of this into consideration if you are considering claiming bankruptcy. Of course, it isn’t your only option. There are ways you could turn your financial situation around and prevent the need to file for bankruptcy in the first place. Read on to find out more.
Cut Your Spending And Expenses
To start with, the first step you need to take is to significantly reduce your spending and expenses wherever possible. You should take a look at all of your monthly outgoings to see if there are any unnecessary ones that you can simply cut straight away. For instance, you don’t need any frivolous purchases, such as coffee to go and visits to the beauty salon. Not while you are in such a fragile financial position anyway. It could also be worth looking at your necessary outgoings, such as utilities, to see if you could reduce them in any way. If you take a look at a comparison site, you might find that you can get a better deal on your electricity or gas by switching to a different supplier.
Take Part In A Hardship Program
If you are struggling with a particularly large debt, such as a credit card debt, you should consider seeing if you are eligible to take part in a hardship program. There are now lots of credit card hardship programs that aim to make repayment of debts a lot easier for cardholders. When you call up to see if you can get on them, you will need to have all of your debts and expenses with you so that you can pass on these details to the assistant on the other end of the phone line. They will then be able to see if you can join their program and get important help with your debt.
Try To Increase Your Income
It’s also worth trying to increase your income in anyway you can. You will then have a bit more surplus cash to put towards your debt and loan repayments. There are various ways you can increase your income, and one is to see if you are able to take on more hours at work. Don’t worry if you are unable to do that, though. These days, thanks to the internet, it’s now possible to establish an extra income alongside your main one. You could start blogging, for example, and set up a passive income that way. Alternatively, you might want to try selling old or unwanted belongings on eBay and Facebook Marketplace.
Sell Any Large Assets
When you do claim bankruptcy, you will need to relinquish any large and valuable assets as these will be used to pay off your creditors. More often than not, it is assets such as property, vehicles, and valuable items. Seeing as you would stand to lose these anyway if you were bankrupt, you might as well sell them now to try and prevent the need for filing for bankruptcy. You can then use the money that you make from them to pay off any outstanding debts and loans.
Go To A Creditor For Help
Did you know that it is also worth going to the creditors themselves and asking them directly for some help with your debts? After all, they would much rather help you pay them back in full than risk you filing for bankruptcy as then they might not receive all of their cash back. So, if you are struggling to repay a credit firm, it’s always worth giving them a call to see if they can offer you any extra help. Sometimes, they might be willing to increase the length of the loan to give you a bit longer to pay it back. This will also mean that they reduce the monthly payments, so that you find it easier to meet each monthly repayment.
Ask Friends And Family For Help
Even though your pride might have prevented you from doing this up until this point, it is now worth thinking about going to your friends and family for help. I’m sure that they will want to help you through this difficult period, and might be able to do so by lending you a chunk of money. You can then use this to repay some or all of your loans. As these are people who love and trust you, they shouldn’t be as strict about the repayments as some credit firms too. So, you might not get quite as stressed trying to pay them the cash back! Not only that, though, but these personal loans are often interest free!
See A Financial Advisor
If you have used all of the tips mentioned above, but it still looks you might need to file for bankruptcy, you might be at the end of your tether. Thankfully, there is one last thing you can try – see a professional financial advisor. A financial expert will be able to set you up with a plan to help you maximize your income so that you can start saving more and repaying back some of your outstanding debt.
Make sure you don’t struggle with debt for too long or else you could face bankruptcy!
