How to recover from financial catastrophe

Personal bankruptcy is not much different from the corporate one. Actually in United States Bankrupcy Code same chapters are applied for both cases. 2008 and the following years were very hard when it comes to both personal and corporate finances. Economic crises the shook the world, left many Americans without their jobs, homes or savings. Now things are not that dramatic, but the post-recession years also lead some people to ask for the bankruptcy discharge. Most of them don’t know that they’re able to survive the crises, by doing certain specific actions, and without asking authorities for help. In this article we’re giving you the steps on how to recover from financial catastrophe.

Gather All of Your Possessions

Personal financial crises, and of course the bankruptcy are states of high alert, and if you were saving money for the rainy days, it really can’t get more wet than that. In addition to these savings you should also gather your children’s college funds, retirement funds and estimate the value of all of your material possessions. The final figure is the amount of money you have. Most of the Americans are gathering possessions they don’t really need all their life, and this is definitely the time to pawn most of those.

Determine the Total Amount of Your Debt

Count all of your mortgages, credit cards, student debt, literally all the money you owe. Try covering some part of it with the money from your savings accounts. Sell some of the luxury items from your possession, and get rid of everything that is not necessary.

Contact Your Creditors

Call all of your creditors and explain your situation to them. Don’t expect them to be too sympathetic, but since this situation can also affect their business, try to find a way to agree on more favorable debt recovery plan. When it comes to creditors, your inability to pay back the debt is concerning them as much as it concerns yourself, so don’t take no for an answer. Offer them regular token payments, because creditors are always more supportive for clients that are at least trying to pay back their debt instead of declaring personal bankruptcy.

Cut Your Costs

This is one of the hardest steps, since you need to renounce from all the luxuries you used to spend your money on. You need to stop eating outside, drinking fancy wines, buying designer clothes etc. But luxuries like these are not the only enemy to your solvency. There are number of other expensive things most people can live without. Your car is one of those things. In most big cities there’s a very functional public transport network, and of course there are also many ride share websites nowadays. Also cancel subscriptions you may have, such as those to a penny stock newsletter. Couponing is also a good way to save on buying groceries and it is much less expensive to live with one or several roommates, than by yourself. You can find plenty more ways to cut your costs online.

Work More

If your current salary can’t cover your living expenses and monthly payments to your creditors, you should find another part-time work. This can be anything from, from waitering to landscaping, but by far the most profitable part-time jobs today are the freelance ones. Use your profession wisely and start a consulting or freelancing on the side. For finding your first clients you can register at some of the popular freelancing market places. No matter what you do, be very determined to get the part-time job or to satisfy your freelance client. If competition is big try outbidding them with asking for a lower salary or offering some extra gifts or services.

By following all these steps you will be able to overcome all the hardships of financial bankruptcy. Remember to always be honest with your friends and family about the situation you’re in and you’ll always be able count on their support.

A modern debt crisis coming?

Economic developments play themselves out over time, structures reverse themselves and as this article finds itself in archives over the next few decades, monetary debt will have taken a new shape. The problem with debt as most who have incurred will point out is that it keeps incrementing and multiplying over time, up to the extent that you end up having almost to pay double or triple the amount you actually borrowed. The list of people who would complain of debt can be an enormous one, students for one are probably the most common ones who find themselves in debt around US owing the heavy tuition fees charged by most colleges.

Government Policies

The real problem with debt policies is the manner in which they end up hurting either the people in debt or the collectors. In the corporate side, loans are usually accumulated from multiple sources and as such the charges for bankruptcy usually follow with lengthy cases trying to figure out the nature of the bankruptcy and getting the payment out of the borrowing company. The potential for harm here is increased because of the possibility of fraud. So the answer has to be the bankruptcy law in which case the biggest problem for all collectors is aligning themselves as the first collectors or the secondary collectors.

Now this is where loan taking becomes truly complicated. In many cases the corporations in question are perfectly aware of their own financial sustainability, but still do not shy away from taking huge loans to fund or finance a few ongoing projects. Then as the payment period draws closer, the bankruptcy is declared which adds up being problematic for the creditors. The bankruptcy law entails that you cannot charge someone for payment once they have declared themselves as bankrupt. Such a law protects the loan takers but ends up mitigating the creditors.

Why those policies still can be dodged.

The problem with most loan takers is the lack of planning they execute whilst taking the loans which means from a legal front a lot of them have to resort to dodging the constrains presented to them. In most opinions, loan cases become so messy to deal with because of having trouble to understand the intent behind each expenditure, that ultimately resulted in the company or the individual going bankrupt.

The change in policies

A lot of the newer government efforts are now focused in creating enough options for the loan takers that enable them to payback what they owe without resorting to crude measures. These policies vary of course because, the difference in the kind of loans creates all the manner in which a person handles the legality of the debt.

Students across universities in the US are afforded the option of income based payment which takes in a periodical assessment of their monthly income and bases off a figure of payment for them based on the figure.

Meanwhile there are various credit reduction schemes that work across reducing the interest amount owed by converting it into a form of investment. For creditors, it works as a preference because it allows them to override their own amounts as bad debts. The concept of a creditor writing off the debt as a bad debt is the tricky issue. Government policies obviously have to cater to the creditors need as well which means the amount has to be returned in some form so when bankruptcy is declared, government tries to impose one value for all creditors so that the compensation is made in equal and full when the company is able to compensate.

What the public demands

The overall allure of penny stock alerts has to be criticized here. Many commercial debts are incurred purely because of a lack of control over what the person spends and how they spend it. If I do have $800 waiting in my pocket, I do not have to spend 7/8 of the amount on luxury items. Whilst the marketing is catchy, you still have to attach the responsibility with the buyer so the criticism is not inaccurate but cannot be used as an excuse to overlook the debts incurred. The government policies might simply be a band aid put on a huge gash, when debt dealing policies are concerned which ultimately brings forward the verdict that you have to simply spend your amounts more carefully and plan your investment a lot more wisely.