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Bankruptcy is one option if your debts have become unmanageable, but at Lines Henry we like to help you as an individual or a business owner before things get to that point, here are our top 5 tips to managing your debts.
Shop for the best deals
If you can see your debts are piling up then you may have to look at ways of recouping some money, you may be able to make significant savings just by getting the best deals. This can start with the day-to-day living costs such as buying supermarket own brands or getting business deals on bulk orders, and looking out for special offers, this can be applied to all your outgoings, haggle with suppliers shop around and see who comes up the best value.
It may sound harsh but are you spending too much on things that aren’t cost effective, could you downsize to a smaller office? Making cutbacks can help you spending each month. If you find your outgoings are significantly higher than your incomings you must make cutbacks even if this means significantly curtailing the standard of living you’ve become accustomed to – failing to do this will only make things worse in the long run.
Create a monthly budget
Prioritisation should be the key for anyone serious about putting their finances on track. Examine all your income and outgoings and prioritise your bills – putting essential payments such as mortgage repayments and utility bills first. Only the money remaining after all bills are paid should be spent elsewhere.
Talk to your creditors
It is vital to talk to your creditors and the sooner you do this, the more likely you are to be able to resolve your debt problems without having to go down the route of a formal arrangement such as an Individual Voluntary Arrangement (IVA) or bankruptcy. In light of the current economic slowdown, the Government and debt charities have appealed to lenders to be as helpful and sympathetic towards borrowers as possible. So if you’re struggling to meet repayments get in touch with your lender and explain your situation. You may be able to negotiate a repayment holiday, or be able to pay back a reduced amount each month by extending the term.
Can you consolidate?
Generally it’s not advisable to borrow more money to get out of debt – by consolidating your debts you will lengthen your borrowing term and ultimately pay back more. However, if you’re struggling to meet repayments on existing debts then consolidating them into one easy to manage monthly payment can make life more manageable and leave you with more money to put towards other bills each month.