If you’re in a situation where you have little or no income or assets, bankruptcy can actually be a good way of dealing with your debts. In most cases, you’ll be discharged just 12 months after declaring bankruptcy, after which most or all of your debts will be written off. However, for some people, bankruptcy just isn’t an option. This article from debt experts, Bankruptcy Clinic, explains some of the steps you can take to avoid being made bankrupt.
Tip 1: Talk to your creditors
A creditor can try to force you into bankruptcy for any debt worth more than £750, so if you’re behind with loan or credit card repayments, don’t ignore the problem. Talk to your creditors to see if they can help. They may be able to offer a lower monthly payment amount that you can afford, or even give you a payment break for a while so you can get back on your feet.
Tip 2: Try to raise some cash
If you own expensive assets such as a flash car, antiques or jewellery, consider cashing them in and using the proceeds to pay off your creditors. Or you could ask family or friends for a loan to help you get on top of your debts so your creditors don’t take action against you. Just make sure you come to a proper agreement about how and when the money will be repaid, to avoid any disputes in the future.
Tip 3: Reign in your spending
Could you afford the monthly repayments on your debts if you changed your lifestyle a little? If you can save money by cutting out things like alcohol, tobacco and gambling, then now’s the time to do it. Other easy ways to save include shopping around for better deals on your mobile phone, Broadband and energy accounts, and switching to supermarket brands for everyday essentials.
Tip 4: Consolidate your debts
You may be able to gain control over your debts by consolidating them in one place and paying a lower interest rate. For example, by moving your credit cards and loans onto a new credit card with a low or 0% introductory rate for balance transfers. A word of warning, however. Make sure that once any introductory rate comes to an end, you’ll be able to afford the repayments, or you’ll be back where you started. And look out for consolidated loan agreements that come with hidden costs that could leave you worse off than before.
Tip 5: Get professional help with your debts
Bankruptcy isn’t the only way to tackle your debts. Other options may be open to you and it’s a good idea to explore them before your money problems get out of control. The expert team at Bankruptcy Clinic can help. Just give us a call and we’ll have a chat about your situation to find out which debt management solutions might be suitable for you to consider.
Alternatives to bankruptcy
- Debt Management Plan. This is an informal way of dealing with your debts, where we agree lower monthly payment amounts with your creditors on your behalf. We also deal with their letters and phone calls, making life a little easier.
- Individual Voluntary Arrangement (IVA). Like bankruptcy, an IVA is a form of personal insolvency but in most cases, doesn’t involve selling your home or other assets. You’ll need to make monthly payments towards your debts for around five years, but you’ll have legal protection from your creditors. And when the IVA ends, any outstanding debts listed within it will be written off.
- Debt Relief Order (DRO). This is an alternative to bankruptcy if you meet certain criteria such as owing less than £15,000 and owning few or no assets. Your debts will be frozen, usually for 12 months, and if your situation doesn’t improve during this time, they’ll be cancelled.
Ask Bankruptcy Clinic for advice today
It’s important to get the right advice about your debts so you can make an informed decision about what to do. Contact Bankruptcy Clinic today so we can get started.
- Call free on 0808 168 7389 from a landline or 01625 462 770 from a mobile
- Email your questions to firstname.lastname@example.org
- Complete our contact form to request a call-back.