How to Avoid Bankruptcy
Bankruptcy has serious consequences, and that is why you should try to avoid it at all costs. After you file for bankruptcy, your assets can be used to pay off your debts and you will have to follow bankruptcy restrictions. Moreover, your bankruptcy will stay on your credit file for at least 6 years after the bankruptcy order is made. As the only loans you will have access to will now have higher interest rates, a poor credit rating may also lead to greater debt.
As prevention is better than cure, our aim at Asset Solutions is to provide assistance prior to a bankruptcy order being made. Thus, we have compiled a list of our top tips to help prevent bankruptcy.
Sell Everything That You Can
Although the debt you owe might seem insurmountable, every little helps. There may be a significant amount of cumulative value in possessions that you do not need. Go through your clothes, furniture, tools, technological devices and so on, and get rid of everything that is not a necessity. This also includes digital possessions, such as subscriptions to streaming services. Although this sounds like a drastic measure, filing for bankruptcy is far more extreme.
Do Not Ignore a Statutory Demand
A statutory demand is a written warning from a creditor stating that if you do not pay your debt or come to another arrangement that is acceptable to the creditor, they may start court proceedings to make you bankrupt.
Many people’s natural reaction when they are in debt and facing bankruptcy is to stick their head in the sand. However, ignoring a statutory demand could be detrimental to your chances of avoiding bankruptcy. When you receive a statutory demand, there is still time to pay what you owe or come to a payment arrangement with your creditor, but you will have to act within the set timescale.
Formal Debt Solutions
If you are unable to see a way to pay back the debt you owe, there are a range of debt solutions available that could be suited to you.
- Debt Management Plan (DMP): an agreement that you make with your creditor to address the terms of an outstanding debt. Typically, you will be able to pay your debt off at a more affordable rate by making reduced monthly payments.
- Debt Relief Order (DRO): once a DRO is agreed upon, you do not have to pay certain debts for a specified period, usually 12 months. When this period ends, the debts included in the DRO will be written off.
- Individual Voluntary Arrangements (IVA): a formal agreement between you and your creditors to pay all or part of your debts over a set period of time. It is approved by the court and so your creditors will have to stick to it.
Whether you qualify for any of these debt solutions depends on your circumstances. Choosing a debt solution will have an impact on your credit rating and other aspects of your life, but the consequences will not be as serious as bankruptcy, and you will have more control of your assets
Seek Expert Advice
If you are worried about debt, bankruptcy or possible insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy.
We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.
