Bankruptcy Information and How to Avoid Debt

Bankruptcy is a way for people to handle debts that they cannot pay. When you file for bankruptcy, you are essentially using your assets to help pay back creditors. With bankruptcy come certain restrictions and limitations that are often very strict. After a certain amount of time you will be released from your debts and some of the restrictions will be lifted. However, filing for bankruptcy will damage your credit and make it difficult to borrow money, apply for credit cards and even take out a new phone plan. Because of this, filing for bankruptcy really should be a last resort. Before it gets to that point, you will want to take a few steps now to help you avoid debt in the future. Here is a quick guide to help you get started.

1. The very first step to managing debt is to make a list of everything you owe. This list needs to include what you owe, whom you owe it to and what interest rates you are paying. payday loans no teletrack direct lender - The loan officer assesses these details along with the applicant's credit score.

2. Next, you will need to prioritise this list. The most important debts are the ones that could cause you the biggest problems. For example, if you defaulted on your mortgage payments you could lose your home, so this should be in the priority list. Other important debts include secured loans, rent, Council Tax, utility bills, taxes and court fines. After you have this list in order of importance, you’ll need to make another list for non-priority debts such as credit cards, bank loans, overdrafts, catalogue repayments and money borrowed from friends.

3. The third step is to work out a personal budget. This can be either a weekly budget or monthly, and should show you where you spend most of your money. It’s also a good way to find out exactly how much you can afford to pay back to your creditors.

4. Once you have your budget and list of debts, you will then want to get advice on how to deal with this debt and what your options are. There are many different options available that are a good alternative to bankruptcy. For example, you can get informal or formal arrangements set up with your creditors to pay back debt owed.

5. The final step is to contact your creditors. Tell them what your situation is, and what you plan to do about it. You might want to consider hiring a debt advisor to do this for you so that they can arrange meetings and draw up the arrangement on your behalf. Remember to be realistic about what you can afford to pay.

A lot of people have debt today, but that doesn’t mean it has to lead to bankruptcy. Instead, there are some important steps you can take today so that you can get yourself out of debt and back on track with your finances. Remember to take care of your priority debts first. You may not have much left over to offer the non-priority debts, but you should still talk to those creditors and tell them your situation.

Catherine Hubbard is a debt advisor who is currently researching bankruptcy information in the industry.