If you are experiencing financial issues or if you are feeling overwhelmed by debt, the idea of bankruptcy may have crossed your mind. With the economy in the state that it is currently in, many people are experiencing financial problems. Some consumers have lost their jobs, and have not been able to reclaim their income even after consulting with a redundancy solicitor.
Other consumers have gotten in over their heads with mortgage repayments, thanks to declining real estate values. A myriad of different scenarios may have brought you to your current financial situation, and luckily, there are several different routes out of these circumstances.
Get Expert Advice Before Declaring Bankruptcy
Before declaring bankruptcy, you should first consult with a bankruptcy solicitor. These professionals can advise you on the facts of bankruptcy itself. One of the first things that they will caution you about is that bankruptcy is permanent.
Thus, if you file and give up ownership of your assets, there will be no way to reclaim those assets in the future. However, certain assets are exempt from bankruptcy, and you will not have to give up those assets when you declare bankruptcy. So that you can make a well-informed decision, your solicitor will help you to determine which assets you may lose and which may be exempt.
Do You Qualify?
In addition to advising you regarding what would happen to your possessions, the right solicitor will also help you to determine whether or not your situation even qualifies for bankruptcy. Some individuals simply do not qualify for bankruptcy while others may qualify, but they instead find more attractive alternatives to bankruptcy. A skilled redundancy solicitor can help their clients to explore many of the alternatives that currently exist.
Can An Alternative Be Arranged Other than Declare Bankruptcy?
In some cases, solicitors can help debtors to negotiate voluntary payment plans with their creditors so that they can avoid a court case. Consumers who are interested in pursuing a more formal arrangement can work with their solicitor to create an Individual Voluntary Agreement or IVA. These agreements set out a regular monthly payment plan that has been crafted around the consumers’ current and projected monthly income.
Although IVAs were popular for a long time, they are losing ground as economic analysts and others project that too many individuals will lose their jobs and not be able to keep pace with the proscribed payment schedule. Even with a redundancy solicitor, job loss situations are inevitable for many consumers. In lieu of filing an IVA, many consumers are now opting to file a Debt Relief Order or DRO, instead.
These arrangements are usually reserved for consumers who have less than a total of £15,000 of debt and who also have very few assets and not much money to pay their debts. Because a DRO is cheaper and easier to file than a traditional bankruptcy, there is growing in popularity. Because they are not reliant on projected income like an IVA is, they are not losing popularity like IVAs are.
Regardless of why you are in your current financial situation, you may be able to get out of it with the help of a bankruptcy solicitor. Rather than just helping you to declare bankruptcy, these individuals may also be able to help you find alternatives as well. Before jumping into a decision that is irrevocable, you should speak to a bankruptcy solicitor about your options.
Fiscal Responsibility is Key in Avoiding Bankruptcy
When you’re struggling to get by, it can be astounding to read that many lottery winners in the UK go bankrupt. While it certainly doesn’t account for a majority, several media outlets have projected that the percentage of bankrupt lottery winners is probably about one third. While this may seem far removed from your own reality, there’s a lesson to learn here about managing money—and that’s applicable whether you’re rich or poor.
Why do these rich lotto winners end up bankrupt?
The main reason is that they spend the money on things they don’t need and don’t take the time to think about the long-term ramifications of their purchases. Sometimes they spend the money on things that are expensive to maintain, and which continue to cost a lot of money even after they’ve been bought outright (properties with high taxes, for example, or boats and other vehicles which require maintenance and insurance). The money isn’t funneled into some purpose which could make more money—instead of thinking of the sudden windfall as an investment in their futures, these winners think of it as a license to spend freely without regard to the consequences.
How does this apply to a normal person who hasn’t won the lottery and who doesn’t have a lot of cash sitting around?
These days a lot of people in the UK are becoming more dependent on short-term loans in daily life. It’s a difficult economy to survive in, which is why short-term loans have become an attractive solution for many different problems. Payday loans, also called cash advances, are some of the most popular products out there. Payday lenders allow their customers to borrow a small amount of money for a short time period, usually under a month. A payday loan can be approved in a matter of hours or days, whereas many traditional loans take much longer to process.
What’s the connection?
Many low-income customers who need payday loans perceive them as a sudden windfall of cash. When you’re sitting at home, trying to figure out where the heck you can get money from to deal with a problem, and you suddenly realize you can get it within hours or days online, it’s easy to believe that you have more financial freedom. You really don’t, however—how you use a payday loan will determine whether it really assists you or whether it leads to more debt and more problems.
Just as many lottery winners go bankrupt because they spend their sudden windfall of cash on things they don’t need, a lot of low-income customers use payday loans on things they don’t really need, because the loans seem like “easy money.” Short-term loans come with high price tags however in the form of interest and sometimes fees. Customers who take these loans out when they aren’t needed to get what they want and not what they need end up paying more in the form of interest, and customers who take them out but aren’t sure they’ll have the money to pay them back end up paying fees.
Some customers also get tempted to take out more than they need since lenders usually allow you to pick an amount. There’s no reason to do this however since the result is just higher interest. It’s best to only take out what is really needed and to pay it back as quickly as possible. The timeframe is something else that may be flexible. Taking out 200 pounds and paying it back in two weeks will cost you less than taking out 500 pounds and paying it back in a month.
Short-term loans can be a great asset to low-income customers in the UK who have no other recourse to deal with the occasional emergency. It’s important not to take out more than you need, though, and to save payday loans for real emergencies. If a rich lotto winner can go bankrupt by spending money on frivolous things, just think how quickly you could go into debt if you’re poor and spend money frivolously. Use payday loans responsibly and they can be your saving grace when they’re needed most.
How To Claw Back Your Life After Being Declared Bankrupt
There are a lot of people out there who are struggling at the moment. We all have our own problems and some people have one of a more serious nature. If this is you and you’ve been declared bankrupt you shouldn’t worry about it. Now that it’s happened there is nothing you can do to change it and worrying about an irreversible event will only leave you more stressed-out than ever before. What you really need to do is look towards the future.
Let’s talk about your credit because at the moment you know it’s not looking too healthy. Just because you have reached rock bottom doesn’t mean you have to stay there forever. Plenty of people have been in your situation before and they have picked themselves back up and climbed out of their hole. That is exactly what you’re going to do and to help you out we’re going to look at a few ways you can take control of your finances again.
Learn to budget
You have let your finances get out of control once and you can’t afford to let it happen again. You will need to learn how to make a budget, but once you have one you need to stick to it religiously. There is no point in having one if you are going to spend money like crazy. Only buy the things you need and eventually, you might end up with a nice amount of money in your savings account.
Pay on time
It’s important that you always pay your bills on time. You have probably gotten used to the fact you don’t need to pay something on time, but look at the mess that got you into. Even if you have a very small bill it must be paid before the deadline. You won’t be able to fix your credit rating if you’re late all the time. This is one of the reasons why a good budget is so important.
Keep an eye on your credit report
When you are declared bankrupt you will start with a new slate. Your credit report will be poor for a few years while the bankruptcy is still on the show, but you must make sure that it doesn’t get any worse. You never know when someone might make a mistake and you can’t afford for that to happen. If you do see anything wrong with your credit report that shouldn’t be there you can deal with it right away.
Don’t make big purchases
Once you have hit rock bottom it should be a wakeup call that you shouldn’t be spending crazy amounts of money when you can’t afford to. This doesn’t stop some people from making big purchases like a car. If you want to buy a car you should save up cash and get one you can afford. You don’t need to drive anything too fancy and you will save yourself from getting into more trouble.
Get some credit
You might be scared to try and get credit again, but you must because it can actually help your credit rating. You will be allowed to get some sort of credit card, even if it needs to be a secured one, so get it and use it. Just make sure you use it sparingly and always pay it off on time. When people see you are able to handle the responsibility it will help you out in the future.
You’ve messed up
You know you’ve messed up and it’s now in the past. Just make sure you change your ways and you can have a bright future. Millions of people are now living normal lives after suffering bankruptcy and you will too.