Going Through A Bankruptcy – Here’s How To Survive

Even the most financially suave individuals or companies can fall into unmanageable debt and file bankruptcy. In the uncertain times the world is living in now due to coronavirus, it’s expected that thousands of individuals and hundreds of companies will have to declare bankruptcy. Many airline companies, for instance, might be expected to go bankrupt as early as May 2020 if they are not provided government help, as they’ve been the hardest hit corporation business.

The harsh reality is that with or without a pandemic, bankruptcy can loom over anyone but you can survive it. Let’s first briefly discuss what bankruptcy entails.

What Is Bankruptcy?

Bankruptcy is a legal process that involves relieving individuals and/or businesses from outstanding debts. Because it’s a legal procedure, you are often advised to seek the help of an attorney or bankruptcy specialist who specializes in this matter. The process can be complex and long as the court decides each case individually. 

The court will evaluate your ability to pay back the debt in order to determine if you should file for bankruptcy or not. If it’s decided that you can declare bankruptcy, it will relieve you of some of your debts while others have to be paid off. 

That might sound like you’re off the hook, but you’re not at all. Once you declare bankruptcy, it will harm your credit history You will not be easily able to apply for loans and you will often be forced to accept higher interest rates on credit cards, and such. 

Declaring bankruptcy will only relieve you of certain debts. It might be able to stop the foreclosure of homes and some other properties or stop your utilities from being shut off because the court will assign you a budget to pay off some of your immediate debts. Some types of debts are rarely, if ever, dismissed by a court, such as child support. In other cases, you might not have to pay the loan you’ve taken out for a car, but the car will probably get repossessed. 

This is just a brief overview of what bankruptcy is. If you live in Canada and would like a more in-depth review you can join fellow Canadians in getting the most common questions answered regarding bankruptcy, consumer proposals, and more. . These questions are answered by bankruptcy experts concerning all aspects of bankruptcy and how the procedure works in Canada. You can also find help in getting a fresh, new start by working with a local, bankruptcy professional. 

Assuming you’ve already declared bankruptcy, it’s time to get yourself back up again and know what you can do to manage it.

Improving Credit

Credit history is what most people worry about. Bad credit will go on your record and can stop you from receiving new loans for years to come. Banks and lenders can charge you higher interest rates and expect secured collateral on larger down payments you make. However, your credit score can improve over time when you take steps to manage your debt.

The first thing you want to do is not add any more debt. That means not having more than you can chew so you don’t accumulate more debt. If you need a loan, you have to research for companies that might provide you a loan without being denied. This is important because being denied by lenders can further damage your credit history.

Pay Bills On Time

Every time you are late in paying a bill, you’re displaying to your lenders that you are  irresponsible. Pay your bills on their due dates. If you can set up an automated way to pay your bills, do so to prevent unintentional payment delays because you forgot.  

Downsize

If there’s any time to downsize, it would be during bankruptcy. You might not be able to downsize your home at this point, but you can downsize your lifestyle. Start buying less and start making better financial decisions in your purchases. If it’s something you can absolutely do without then  don’t buy it. This could be making do with the clothes you already have, and cooking at home instead of eating out or ordering takeout. 

Use Cash

For most of us, cash is limited. Using cash instead of credit cards will automatically force you to spend less. This limited amount of cash will help you stick to a budget easier. 

Encompassing the several things you can do during bankruptcy, is the idea of not feeling guilty or that you’ve failed. There can be external factors that push people into bankruptcy. It’s not the end of the world, and some of the richest people in the world have had to face bankruptcy more than once. But it is a warning to be more careful in the future with money and your financial decisions.