The more cards you have, the more the chance of incurring unnecessary expenses. If you have small debts your savings can grow and protect you when you need it. Its imporntant to change the bad habits that create debt. These habits are developed over a lifetime, but need to be changed much more quickly.
There are no friends in the credit card companies. Removing your money from your posession is their only goal. If that sounds a little harsh, the truth is that this is war, and for the most part, the companies that offer credit in a predatory fashion, and that includes all of them, are the enemy. And they are winning.
Remember, being a little short because you made a purchase of something that you wanted or needed is one thing. Being short, and having the credit card companies drown you in increasing debt for years to come is much worse.
Mortgages and auto loans are areas where we want the best interest rates. If your consumer debt is too high, both of these areas will be difficult. If our consumer debt is really high, debt elimination programs may be necessary before we even buy things like homes and cars.
If you can avoid debt altogether, you have really dodged a bullet. A convenience card, or an emergency card is fine. I keep it at home in my desk drawer. It is used for emergency car repair, maybe new tires or other items I cant avoid purchasing. If you can afford your emergency expense in cash, then you are still better off. Debt elimination is not quit as easy as just avoiding the debt in the first place.
When your debt becomes a problem, you are better off destoying all but your lowest interest rate card. Make some room in your budget to begin paying off your highest rate card, even if it means working more, or spending less. Whatever you do, dont use the card!
If you have 5 credit cards, make the minimum payment on 4 of them. Make a higher payment on the one with the highest interest rate. When that card is paid off, apply that payment to the next card. Remember, to pay off a card, you must pay higher than the minimum payment.
Transfer your balance to a lower rate or zero rate card if you get an offer for one. Just dont use the card! Debt elimination is easier at zero percent interest.
Just think about how much less stressed you will be after you have eliminated your debt.
It is not surprising when you consider that approximately 8 million people in the UK are suffering with excessive debt due to a number of reasons. With 2,915 people becoming redundant every day during the 3 months to end January 2009, it is little wonder that this level of bankruptcies is arising.
So what are the main benefits and drawbacks of going bankrupt? And are there any real alternatives for many people?
What are the main advantages for you of going bankrupt?
* For most people bankruptcy provides immediate peace of mind as the problem is effectively taken out of your hands
* It is possible that you will be automatically discharged after one year (or less in some cases), though you will generally continue to have an attachment to earnings for a further 2 years. * No more letter, harassment or phone calls from your creditors.
What are the main negative implications for you of going bankrupt?
* You will lose control of all of your main assets, such as your house, car, jewellery, etc.
* You will not be able to obtain a loan or credit for over £250 (without the permission of the lender).
* You can no longer act as a company director.
* You cannot take any part in the formation, promotion or management of a limited company without first obtaining the permission of the court.
* You can only trade in a business under another name if you inform all persons concerned of your bankruptcy.
* You may no longer practice as a Lawyer / Charted Accountant.
* Your credit will be affected for many years after you have been discharged.
* You are not permitted to act as a Justice of the peace.
* You are not permitted to become a member of parliament.
* You are not permitted to become a member of the local authority.
* You could be publicly examined in court (though this is not usual).
* If your current home rental contract prohibits bankrupt individuals from renting the house, you could be evicted from your home.
* You will find it difficult to rent a house through any major letting agent.
So there are a number of things to consider when you are thinking that bankruptcy is the best option for you and there are a number of alternatives for many people that would normally have gone bankrupt.
* Debt management
* Independent Voluntary Arrangement
* Debt consolidation
* Legal debt write-off
The biggest issue really for most people is that they do not know which is the best way to go for them and they think that bankruptcy is a quick fix. In some cases bankruptcy is the only option, but for many a multi pronged approach to the problem is far better.
There are a number of option available under the Consumer Credit Act 2006 to enable you to pay as little as £20 per month to a creditor and they must accept if you can show them that you are suffering anxiety and stress from the debts you have. This is all thanks to the unfair relationships section which gives a great deal of power to you.
It could be that some of your creditors do not have the legal right to the money they are demanding. This is where legal debt write-off is useful it can be used to get you debts completely written off.
An Independent Voluntary Arrangement ( IVA) is a very popular method of cutting your debts and getting out of debt within 5 years, but it is not available to everyone and the failure rate can be high with people who do not have a guaranteed stable monthly income throughout the 5 year period.
Debt consolidation does not have a very good success rate as many individuals are then free to take out more debt and actually get targeted by the banks as a prospective good customer.
It is never easy to find a one-size-fits-all approach to personal debt clearance and the best approach is to look for a middle path. It maybe that you can get some of your debts written-off, whilst you may consolidate other and free up cash to pay-off secured loans more quickly.
It is important to realise though that some of your debts need not be paid at all if the bank did not perform their duties to you properly and left you in a disadvantaged position. The correct legal advice on that subject is vital!
Whatever your circumstances, finding out your options and getting advice about all these possibilities is a must before you decide to go bankrupt.
Both Ted Batron & Chris Ball are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Ted Batron has sinced written about articles on various topics from Anger Control, Debt Management Counseling and Finances. If debt has gotten out of control and you feel trapped, there is a solution. Bankruptcy is not the solution, it will destroy your credit rating for at least 10 years making it nearly impossible to buy a house or car. Learn how to. Ted Batron's top article generates over 27100 views. Bookmark Ted Batron to your Favourites.
Chris Ball has sinced written about articles on various topics from Finances, Collection Agencies and Finances. After the loss of his business of 21 years in the Banking Crisis, Chris Ball was left with debts that were beyond his ability to pay. He had to find a unique solution to this difficult situation. In the process he learned a massive amount about how debt w. Chris Ball's top article generates over 74000 views. Bookmark Chris Ball to your Favourites.