Dealing With Bankruptcy Got You Uneasy? Here’s Some Advice To Help You Out
Bankruptcy, unfortunately, is a very common issue that many people have to deal with over the course of their lives. Whether you are drowning in college loans, fresh out of a job, or fell victim to a failing business, bankruptcy can knock on your door unannounced.
It is scary how one moment you could be spending the summer in Barbados or living comfortably, at the very least, and the next, you could be worried about putting food on your dinner table. Money and wealth are among the most fickle and unreliable aspects of life.
Sadly, whenever we find ourselves in possession of extra money for a few consecutive months, most of us fail to account for potential downfalls and losses; we are very quick to spend our money on a collection of necessitous and rather luxurious items. This doesn’t only make us more prone to falling into bankruptcy but it also keeps us stuck in a cycle of self-blame.
Dealing with bankruptcy can be emotionally, physically, and mentally damaging. No matter how strong you try to be and how much you try to hold up, there will come times when you will feel afraid and alone. Because being bankrupt is realistically never easy, we gathered some advice that can help you out.
Set a Budget
Not many people realize how difficult budgeting can be, especially if they’ve never tried to track their spendings or create one before. Setting a budget is one of the most important things to do when it comes to money management and control. There are many different methods by which you can closely monitor your income and all your expenses. While most people create spreadsheets, you can choose the method that you feel is easiest to track and keep up with.
The first step in creating a budget is calculating all your fixed costs and determining whether you will be able to cover these costs. These expenses are the ones that you need to pay monthly and usually include mortgage payments, insurance, and phone or home bills.
You should then start to calculate all your other needs, like food, entertainment, and clothing. You should always ensure that your budget allows for emergency or discretionary savings. The amount of money that you spend should not, in any way, go over your financial abilities.
If you want to bounce back from bankruptcy, you will need to make some changes to your spending habits, and this includes eliminating the use of credit cards. If you go out with a limited amount of cash, you will be forced to spend within a certain limit.
You will have no other option than to stick to a budget and avoid spending more than you can afford by using a credit card. It’s not always easy to go back to the cash-only lifestyle, especially if you have gotten used to credit cards. Besides, you barely ever need to use cash to make purchases anymore. Using only cash, however, can help you save a great deal of money.
When you have a certain amount of money that you can see and count to spend from, you will be more mindful about your spending habits. If you find yourself short on cash when you are shopping, you will be forced to rethink some of the unnecessary items that you planned on buying.
This can also help you ensure that you stick to the budget that you created; once you spend all the money that you had designated for a specific category, you will have to wait until the following month to make another purchase in that area. You can always re-introduce credit cards into your lifestyle when you feel like you have got a better handle on your budget.
Sell Your Bankruptcy Debt
Almost every creditor that’s a part of a huge corporate Chapter 11 bankruptcy case will be given the option to buy the creditor’s claim. The bankruptcy claim buyers at pioneerfundingllc.com explain that these offers usually come from expert claim traders. These traders are experienced at purchasing discounted claims at their perceived ultimate value. Debt investors, along with hedge funds, are some of the most common claims buyers. They usually buy these claims in strategic attempts to own a significant percentage of classes of creditors so that they can control the direction of the case.
A few weeks after you file your bankruptcy, you must file liabilities and assets schedules. There are two different schedules for debtors with secured and unsecured claims.
The purpose of these schedules is to distinguish how much the debtor owes the creditor, and whether the claim is contingent, disputed, or unliquidated. Liquidated, noncontingent, and undisputed claim creditors are usually the first ones contacted by claim buyers. This is because later in the case, these claims are not as likely to be prone to litigation.
Pay on Time
Your credit history is, to a great extent, determined by your tendency to pay on time. On-time payments make up to 35% of your entire credit score. You will most likely have trouble with finding lenders in the future if you make late payments. This is because they can infer that you are not responsible, especially when it comes to financial affairs.
You need to diligently pay on time because you need to rebuild your credit score after having gone through bankruptcy and similar situations such as credit counseling and debt settlement. Coming up with a clear system that includes due dates, marking your calendar, setting reminders, and using auto-pay are all things that you can do to ensure that you don’t miss or forget any of your payments.
Businesses and individuals go bankrupt all the time. Filing for bankruptcy can be one of the hardest things that you’ll ever need to do. However, what’s even more challenging is dealing with the situation and recovering from the setback.
It is a process that will take time, effort, and a lot of attention to detail. While it can be hard to closely monitor your financial affairs, it is a skill that you will master for life. Hopefully, learning these skills will save you from falling into that trap once again.