For people that have incurred massive debts and are in serious financial difficulties, filing for insolvency may seem like the lesser of two evils and the easier thing to do than continue to be harassed by creditors. However, filing for bankruptcy can be very problematic so make sure you have implemented sound financial management and tried to prevent it through other measures.
Bankruptcy filings often result in court hearings that comb through every financial action of yours sometimes going back months and years which means it is not an easy way out. New laws mean that there are stricter measures to ensure declaring bankruptcy is not abused by any debtor. Not to mention, you may still need to keep up certain payments to your creditors and go through extended mandated financial counseling and advice and financial education sessions.
Lastly, being filed as bankrupt won’t protect you from every creditor and you may still have lawsuits filed against you. The subsequent poor credit rating means you will be unable to borrow any significant money for a minimum of 10 years leading to greater debt in the long run.
Use the following tips to get yourself back on track:-
Create a Rock Solid Budget
Debt and financial problems occur when your expenses outweigh your income or if you are using your income in a manner that is creating expenses that you cannot realistically afford. Create a budget putting essential payments such as bills, utilities, education fees, food, mortgage payments, etc first and counting the rest as income that needs to be saved. Do not use credit cards to pay any bills or to do unnecessary shopping. Wherever possible avoid automated payments and keep track of each one individually.
Reduce your lifestyle spending so move to a smaller home, drive a smaller car, eat out less often and cancel subscriptions to services that are too expensive but impart little value. You can also skip vacation spending for a couple of years to prevent your financial situation from worsening.
Look Up New Income Avenues
Consider expanding your current sources of income so that you are better able to pay for current expenses and still have income left over to save. Read about investment in fruitful avenues after selling an asset you own. You could also get a second or third job if you have the time and good health on your side. Freelancing websites and other job-based apps allow you to generate a considerable part-time income so put your skills to good use. If you have poor health and are suffering from unemployment you can always apply for unemployment benefits or food assistance and other government help schemes for bankruptcy Montreal.
Settle Your Debts
Regardless of your current situation make a concerted effort to settle your debts using mechanisms such as debt consolidation and debt settlement. Debt consolidation is when loans are repaid at a lower interest rate than previous agreements after negotiating with creditors. If you are still in a position to apply for a loan you can use this to settle as many of your debts as possible. You may consider hiring a financial advisor at this point if you can afford it. Debt settlement is also another avenue in which part of the debt is waived off since the creditor is approached by the specialist you have hired who will convince them that if you go ahead and declare bankruptcy they may never get their money back.