fbpx

When You’re out of Options: 5 Myths and Facts About Declaring Bankruptcy

When debts grow out of control and you simply cannot make ends meet, bankruptcy is sometimes the only option. While bankruptcy is not an easy way out, it can help you legally overcome your debt and improve your financial outlook. Unfortunately, there are many bankruptcy myths that are perpetuated. Understanding these myths will help you to fully understand the truth regarding declaring bankruptcy.

When You're out of Options: 5 Myths and Facts About Declaring Bankruptcy - struggling with debt image

Types of Bankruptcy

There are multiple types of bankruptcy that can be filed, though there are two that are more common than others. Chapter 13 is often referred to as the “wage earner’s bankruptcy” because you are required to pay monthly payments. When people file for bankruptcy, they sometimes hire a lawyer to help.

Chapter 7 is best for those who have mostly unsecured debts. The process can typically be finished in six months or less, though you may be required to submit non-essential assets for liquidation to pay off the debts you owe.

5 Myths About Declaring Bankruptcy

As with most things, there are always those who spread falsities regarding bankruptcy. Unfortunately, bankruptcy is still considered a somewhat taboo subject, even though millions have filed. The following are some of the biggest misconceptions regarding declaring bankruptcy.

1. One of the biggest myths regarding bankruptcy is the individual will lose everything. Many people mistakenly believe filing for bankruptcy means they will have to give up their house, car, and all assets. For most people, Chapter 7 is a non-asset bankruptcy, so you do not give up anything.

2. Many people also believe the myth that all their debts will be wiped out by declaring bankruptcy. There are some types of debt that are not forgiven in bankruptcy, including student loans. Debts you are personally responsible for are generally not forgiven.

3. The belief that filing for bankruptcy means you are a big failure is truly erroneous. Many people believe they are admitting failure if they file bankruptcy. Most people end up filing bankruptcy because of a loss of wages rather than poor financial management.

4. A common myth that never seems to die down is the belief that your financial future will be ruined by bankruptcy. Although you will certainly have limited access to credit for about ten years, your credit score will likely begin to see improvements shortly after your bankruptcy is declared. Filing for bankruptcy is not the end of your future.

5. Some people mistakenly believe it would be better to pay off their debts than file for bankruptcy. If your debts are greater than 50% of your income, it would be wise to at least consider declaring bankruptcy because paying off the debts will be difficult.

Benefits of Declaring Bankruptcy

· Takes away a great deal of stress

· Can prevent foreclosure

· Allows for a fresh start

Although it is not right for every circumstance, there are many benefits to declaring bankruptcy. Most people find it easier to consult with a bankruptcy lawyer before they make a final decision.

Conclusion

Declaring bankruptcy does not mean you have failed and it certainly will not ruin your financial future. Taking the time to learn about your bankruptcy options will help you to make the best decisions for your needs. Bankruptcy will help you to overcome the vast majority of your debts and give you peace of mind in knowing there is less financial stress.

Saying Goodbye to Debt: Do You Know These 4 Alternatives to Bankruptcy?

If you’ve got major debt problems – you might think your only option is to file for bankruptcy. It can be a hard step to take, but for some, it’s the only option. However, that isn’t always the case. Did you know that there are a number of different options for you even if you think that filing for bankruptcy is inevitable? In this article, we’re going to look at them. Make sure you’ve exhausted every possible option before you decide that bankruptcy is for you.

Saying Goodbye to Debt: Do You Know These 4 Alternatives to Bankruptcy? - empty wallet image

1. Get a debt consolidation loan

While it might not be the best idea to take out more debt in order to pay off other loans – this could be a viable option if you really believe that your money-issues are only short-term. A debt consolidation loan could help you by giving you one large loan to pay off all your smaller debts. This can work well if you can arrange a new loan with better interest rates and lower monthly repayment amounts which will help you clear other debts that are causing you more trouble to pay off. When you can shop around for different loans with more favourable payment plans and interest rates, this could be a good option.

This option will only really work for some people, and especially those who are only having short-term money issues.

2. Come to an agreement with your lenders

You might be able to come to an agreement regarding specific payment plans, extension periods, or a reduction in your total debt by discussing it with your lenders. Many of them will want to get some back rather than nothing if you file for bankruptcy. So give them a call and discuss your options, and make it clear that you are considering bankruptcy seriously. You can try sites like this for more information: www.debtconsolidationnearme.com/florida/index.php.

3. Get an administration order

An administration order ties up all your debts into one package to make the situation slightly easier to manage. Then you can make one single monthly payment to a court. These are normally for smaller debt amounts and are good for people who can afford to pay something back. After an initial period, the rest of the debt will be written off.

4. Get a debt relief order

The final of our alternatives to bankruptcy we will consider is the debt relief order. If you’ve got debt and don’t own a home, then you could be entitled to a debt relief order. These are normally granted to people who don’t have many assets and cannot repay their debts. When you get a debt relief order, lenders will not be able to take action to recover money owed for at least a year, unless they get specific court permission. This leaves you with a bit more room for movement without having to worry about having debt collectors taking any of your things away.

When you have one of these relief orders in place, you’ll still have to pay normal bills like your utilities. After this initial period, your debts will be written off. To qualify for one of these orders, you must not be able to pay any debts, but the debt needs to be a smaller amount. You also must not have many assets.

Is Debt Always A Bad Thing?

Is Debt Always A Bad Thing? - celebrating financial freedom image

Could debt actually improve your life? Image licensed under Creative Commons.

Is debt always a bad thing? Many of us automatically assume debt is a hugely negative state of affairs, and while it’s true that unmanageable debt is frightening, it may surprise you to learn that some debt is actually positive. Often treated as a dirty word, most of us can’t avoid having some form of debt, while some try to actively avoid it.

And yet not all debt is created equal. There are some positive forms that could help you reach your goals quickly. You just have to know how to use it. Here’s how the right kind of debt can get you ahead of the financial game…

Debt Can Help You Make Money

It may sound hard to believe, but the right kind of debt really can help you to make money. The key is not to go into debt for consumer items you couldn’t otherwise afford, like that designer bag or new iPhone. Instead, use debt as a powerful tool to help you reach your life goals. Invest in an asset – like a house or apartment or even for something like doing an MBA and you’ll be channelling money into something that will pay you back. If you’re clever about the property you buy – selecting an up and coming area, negotiating a good purchase price armed with data from sites like MousePrice– then the value will rise over time. When you’re ready to sell, you will have accumulated a profit, even with the mortgage balance to settle. If you go into debt knowing that you’ll get greater value out of it further down the line then it’s a positive investment.

It Can Be Cost Effective For Purchases

Interest rates are at historic lows right now, so if you want to do something like buying a car, it’s actually better to use credit to make the purchase than dipping into savings and investments. If you have money in tax free savings like ISAs or even stocks and bonds, it doesn’t make sense to cancel out the returns you get from them in order to make a purchase. Considering your overall financial picture, you’re better off using credit to pay – especially if you lose tax benefits by liquidating an asset.

You Can Fill In Cash Flow Gaps

For those who have a portfolio career, are self-employed or starting their own business or work in a job that is highly dependent on commission, life often involves a fluctuating income. When used responsibly, short-term loans can get you through time periods where cashflow is lean – provided you use the boom times to pay them off. This regular repayment schedule will also help to build a really good credit rating, as lenders can see a history of responsible borrowing. You will then be offered better rates, reducing the overall cost of borrowing. This creates a virtuous circle of good credit that benefits your financial situation.

Debt doesn’t have to be an intimidating or shameful prospect- if you learn to use it responsibly, it can really be a force for good in your life.

 

How To Be In Control Of Your Own Money

Being in control of your own money is very important if you want to make sure that you avoid any sort of unmanageable debt. You should always know where your money is going and how much you have to live on each month. In this article, we are going to help you with understanding how you can be in control of your own money. Make sure to keep reading if you’d like to find out more.

How To Be In Control Of Your Own Money - managing money image

Photo by rawpixel.com from Pexels

Know What You Have

First of all, you need to make sure that you know exactly what you have each month to spend. This is very important as you won’t be able to be in control if you don’t know what you have to work with. Make sure to take a look at your bank statements and if you have a joint account, discuss with your partner how much you both spend each month. This can help you figure out what you need to control and how to control it.

Use Online Banking

One of the best ways to stay in control of your own money is to use online banking. Opening a bank account online is really easy and when you do, you’ll be able to view up to date information about the money that is in your account. If you have an online bank account, you should make sure to check it at different intervals throughout the month to ensure that you know how much you are spending. You would be surprised at how much the little amounts can add up to.

Make Cutbacks

When you start to see how much money you are spending every month, you will know what you are spending money on unnecessarily. This is a good way to figure out what you can make cutbacks on. Write a list of things that you spend too much money on and set yourself some goals to spend less money on that every month. For example, if you find that your daily coffee is amounting to a high figure, you should try and have one or two less a week. Once you make these cutbacks you will feel in control of your money and you will be happier with your bank account in the end.

Give Yourself An Allowance

Our final tip for those who want to be in control of their own money is to do something which a lot of parents do to teach kids the value of money – giving an allowance. You should allocate yourself a certain amount of money to spend each week and if you do this successfully, you will feel more in control of your money. A great way to do this is to take out cash each week and only spend that cash on your day-to-day purchases. Give yourself an allowance and feel more in control of your money.

Follow our tips if you want to stay in control of your money.

 

 

 

Here’s How You Avoid Debt on Your Credit Card

If you know that you have a lot of debt on your credit card then you will know how frustrating this can be. You will also know how hard it can be to try and pay it off before you accumulate more debt and this can put you in a very dire situation. Luckily, it is very easy for you to avoid debt and if you make the effort to follow these simple tips then you should have no problem getting on top of your debt once and for all.

Always have an Emergency Fund

So many people manage to create credit card debt because they were forced to pay an expense that they did not have the money for. They have absolutely no room for savings but if you were to have an emergency fund then this can really help you to avoid credit card debt. You can easily use the cash to pay for any emergencies that arise and this is a fantastic way for you to really stay on top of everything. Of course, if you are struggling to save then one thing that you can do is put some money away every single month. When you are able to do this, you can then accumulate a savings fund without having to struggle or manually put the money away. There are also many apps out there that you can use to try and really save on your expenses so these are well worth looking into.

Here’s How You Avoid Debt on Your Credit Card - credit card merchant image

https://www.pexels.com/photo/person-holding-cardand-terminal-1308747/

Charge What You Can Afford

You have to avoid the mistake of using one of your credit cards to buy things that you cannot afford. You can easily avoid debt by purchasing the things that you know you can afford or even things that you have the cash for. If you cannot afford to pay with cash then it is important to know that you can’t charge it to your card. If you do have to charge to your card then try and look up www.luckyloans.co.uk as this is a great way for you to find out if it is possible for you to get a lower interest rate when compared to the one that you have on your credit card.

Here’s How You Avoid Debt on Your Credit Card - buying on credit image

Photo by rawpixel.com from Pexels

Avoid Balance Transfers

Don’t transfer any balances that you have on your card so that you can avoid your payment date. The main reason for this is because if you transfer one of your balances to another credit card then you have to have a good reason for this. You may want to take advantage of a lower interest rate or you may even get a cash incentive. Either way, if you don’t do this then your bank will carry on increasing in debt and this is the last thing that you need when you already have so much going on. Of course, if you want to avoid this then there are so many things that you can do, such as researching the card before you buy and even putting in the work to make sure that you are getting the best deal.