There are too many reasons of why a person gets trapped with debts. Ranging from the understandable purposes, such as bad investment choice and unexpected medical bills, to reckless and toxic habits, like gambling and overspending on luxury goods. Anyway, the dues are coming up, and there is no reason to cry over the spilled milk. All left to do is to face the consequence.
Here are what-to-dos when you have too many debts:
Do it Yourself (DIY) debt management
Before handling the debts by yourself, you should ask yourself these following questions:
1. Are you a realist person?
You can’t answer this question just by a thought that pops up in your mind. The most objective method is by looking back at your financial records, especially the ones that require prediction.
2. Do you pay attention to details very well?
Still, the best way to determine whether you are capable of meticulously evaluating your debts or not is by looking at how well you handle numbers in the past.
Do not risk any mistakes to happen, specifically when you have heavy debts. It is your future finance that is at stake.
3. Do you have enough time to allocate?
DIY debt management will you the time not only when you are in the planning stage but also when negotiation with your debtors is needed.
This question is strongly tied to the first one. Calculate the available time for the matter realistically. Otherwise, your DIY debt management can turn into a financial disaster.
After the self-evaluation of how credible you are to manage your debts, you should begin scheduling your activities, such as preparing the necessary documents, meeting with the debtor, re-assessing your financial condition, and reviewing your payment plan.
Consulting with a debt advisor
Choosing for the right consultant might be tricky because there are many advisors with inadequate knowledge. All they can provide is just general advice which will not give you any practical benefit. Or worse, they will cost you more than they offer.
The easiest way to spot credible debt advisor is by checking on their certificate and their membership with affiliated organizations. There are free consultation services for debtors with excellent accessibility, such as Clearpoint, a member of the National Foundation for Credit Counseling (NFCC), for US residents; and deby advice Leicester for UK residents. These services help to manage personal debts and even to file for bankruptcy.
Filing for bankruptcy
Although bankruptcy can be a result of a reckless decision, governments still offer a second chance for those who suffer from financial collapse. This is the worst situation that can happen to a debtor, and handling the filing requires lawyer service.
Mostly, the causes of bankruptcy are having a mortgage and student loan that exceeds their capacity to pay the debts off. If the bankruptcy plea gains approval, the debtor is lifted from the financial burdens.