Financial difficulty has become all too common for many households throughout the UK. With the number of people out of work currently around 2.5 million, those who are struggling to find paid employment of any kind are finding it hard to make ends meet. Being in this situation can be extremely distressing, especially for those who have a mountain of debt to clear.
No matter how it has been accrued, debt can be difficult to cope with, even more so for people who don’t have the means to pay back what’s owed. Unemployed people are particularly vulnerable to debt and all its negative effects, especially when falling behind with repayments. If, for example, they have to choose between repayment and basics like food, the latter will come first.
In most cases, unemployed people are likely to live in rented accommodation. They’re also likely to have few, if any, valuable assets, but if they find themselves heading towards bankruptcy, then things are likely to become that little bit more complicated when it comes to paying off their debts. Bankruptcy is an extreme solution to solving debt problems, but it can feel inevitable in some cases.
Those out of work who are homeowners may find it difficult to declare bankruptcy without fear of losing their home. The reason for this may be that, if they don’t have enough money coming in to pay off any of their debts, they could find their home at risk, especially if struggling to meet monthly mortgage payments. Some protection may be available for unemployed homeowners though.
Those who have a home despite being out of work at least have something to help pay off any large debts – their home. As 77% of people who file for bankruptcy are non-homeowners, it shows that those with fewer assets have no choice but to declare themselves bankrupt. Homes are worth thousands and can be taken from homeowners if they fall behind with mortgage payments.
Losing your job can be incredibly distressing, especially if you have debt payments to keep up with. Having regular income taken away from you will instantly make it harder for you to pay back what’s owed to your creditor or creditors, but homeowners are at least better placed than non-homeowners when it comes to falling into the bankruptcy trap.
To avoid bankruptcy, it might be worth doing what you can when it comes to managing personal finance. Try to cut out any luxuries you’re spending a large amount, only paying for the basics. Talk to any creditors about your situation and see what they can do. Also, it might be worth talking to someone who can help in times of need, preferably someone with experience of bankruptcy.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.