Once you get into a spiral of debt, it’s incredibly hard to get out of. If you can catch it early on before things get too bad, you’ve got more of a chance of paying back the money and putting yourself in a good financial position. But in some cases, things have already gone beyond that point and you might feel like there’s no way that you’re ever going to get out of debt and you’ll have to declare bankruptcy. It’s important to remember though, that there is always a way, even if it isn’t ideal. These are some of the best last resort solutions before you declare bankruptcy.
It’s the interest on your debt that really gets you. If you can only just afford to cover the interest and not pay off the original balance, you’re going to be stuck in that cycle indefinitely. But if you can find a way to get out of those interest payments, it’s a lot easier to deal with debt. The best way to do that is by using balance transfers on zero percent interest credit cards. Getting another credit card might not seem like the most sensible thing to do right now but if you do it right, it can help you to get out of debt. There are some credit cards that offer an introductory period of zero interest. You can use that to pay off existing debts and then clear the balance on the new card without paying interest. However, it’s important to remember that, once the introductory period is up, you’ll be paying high interest rates again. You should only use this method if you’re sure that you can pay off the new card before the interest kicks in.
Debt Relief Order
Bankruptcy is a last resort option that will clear your debts but it puts a black mark on your record and it’ll affect your finances in the future, so you should look for a different option first. A debt relief order stops creditors from taking action against you for up to 12 months so you have a bit more breathing room. It’s a great way to help with debt relief but only specific people apply. If you owe less than £20,000, your assets are worth less than £1000 and your disposable income after expenses is less than £50, you’re eligible for a debt relief order. If you don’t meet those criteria, you may struggle.
Find More Income
You might not be able to clear your debts with your current income, but if you can find ways to earn a bit of extra money on the side, you can put that into your debts. There are a lot of different side hustles that you can do from home to supplement your income. You could do freelance writing, become a virtual assistant or even start a small online shop on eBay or Etsy. Any extra money that you earn can go straight toward paying off your debts and help to make things more manageable.
Declaring bankruptcy is the right call in some cases, but you should always try these options before you do that.