Explore essential steps to consider before declaring bankruptcy in this insightful guide. Learn how to create a budget, negotiate with creditors, and explore alternatives like debt consolidation and debt relief programs.
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“Hey everyone I’m currently 23 years old and in serious debt with seemingly no way out. I have 25k debt with the bank @ 13.90% interest, 8k debt on gem visa. My only asset is a vehicle worth probably 15k, which the engine blew up a few days ago and I now have a 6k mechanics bill (which I can’t pay since my credits already so bad that nobody will lend to me). I also owe my parents roughly 2k. I also owe about 1k in fines and roughly the same in RUCs. I only make about 65k a year maybe slightly more with overtime, I have no other sources of income or investments.
My weekly expenses are: $300 rent, $50-100 power/internet/water, $200+ petrol (my company is tight and doesn’t pay gas even though I have to travel a long way), $100 minimum in food, $110 per week for my bank loan, usually like $200 per month for minimum payment on credit card, $20 per week on fines, usually $50+ on misc expenses, $60 per month phone bill. I generally only get 1k or so in my hand after tax every week, it’s all gone basically instantly.
Im almost certain I will have to declare bankruptcy, id love advice from someone who’s been in this position before since I really didn’t understand anything about money I was naive and now I’m in a terrible position. Will I have to declare bankruptcy, or is there a way out? I’d love any advice. Thanks
Edit: I didn’t ask for life advice purely financial“
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Hi there! I can offer some general guidance for your situation. It’s important to remember that declaring bankruptcy is a significant step with long-term consequences, and you should consider it carefully. Here are some steps you might want to take before considering bankruptcy:
Create a Detailed Budget:
Start by creating a detailed budget that lists all your income and expenses. This will help you gain a clearer understanding of your financial situation and where you can make cuts.
Contact Your Creditors: Try reaching out to your creditors and explaining your situation. Sometimes, they may be willing to negotiate lower interest rates or work out a payment plan with you.
Consider Debt Consolidation:
Look into debt consolidation options, where you can combine multiple debts into one with a lower interest rate. This can make it easier to manage your debts.
Increase Your Income: If possible, try to find additional sources of income, whether through part-time work, freelancing, or a second job. Increasing your income can help you pay down your debts faster.
Seek Financial Counseling:
Consider meeting with a financial counselor or advisor who can provide personalized guidance on your specific situation and help you develop a plan to manage your debts.
Explore Debt Relief Programs:
Research options like debt settlement or consumer credit counseling, which can help you manage your debts without bankruptcy.
Consult with a Bankruptcy Attorney: If you’ve exhausted all other options and believe bankruptcy is the only way out, consult with a bankruptcy attorney. They can provide legal advice and help you navigate the bankruptcy process.
It’s important to keep in mind that bankruptcy should only be considered as a last resort, as it can significantly impact your credit and financial future in the long term. Therefore, it’s crucial to explore all other alternatives before making that decision. Seeking advice from a professional financial advisor or attorney can help you understand your specific circumstances and provide you with tailored advice.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
