When you’re trapped underneath a mountain of debt, it feels like you’re never going to get out. But if you strip back your budget and increase your monthly payments, you should eventually be able to clear the debt and get your finances in order again. Unfortunately, there are some cases where that just isn’t possible. If you are not earning enough to cover your payments and you’re falling further behind every month, you could end up in some serious trouble. Debtors will only give you so much time before they want the money to be repaid, so what are you supposed to do if you don’t have it? In this situation, it might feel like you don’t have any options but that isn’t true. These are some of your last resort options when you can’t afford to pay your debts.
Payment Plans
The first thing that you should do is speak with your creditors and see if you can set up a payment plan. If you can’t pay the full amount each month, you just have to pay what you can afford. It’s not the ideal situation for your creditors but it’s better than nothing and as long as the debt is being paid back, they will usually be open to setting up a payment plan. You need to look over your finances and work out what you can realistically afford to pay each month. Then get in touch with your creditors, explain your financial situation, and let them know how much you can pay each month. Hopefully, they will agree to change the monthly payments so, although it will take you longer to pay off the debt, you can make the payments on time each month. This will make it a lot more manageable and stop creditors from sending the bailiffs round to collect the debt.
Selling Assets
If you can raise a lump sum of money quickly, you can use it to pay off all or even just a big chunk of the debt. If you’re in a really bad situation, you may have to consider selling some of your assets to find that money. If you have a lot of debts, you should consider selling your house and downsizing, so you can use the extra money to pay back what you owe. If you need to sell your house quickly, you should look at companies like We Buy Houses who will give you a cash offer right away and put the sale through quickly. You won’t get as much as you would if you put it on the market yourself but you can get the money quickly. If you have smaller debts, you should consider selling assets like your car to raise the money.
Bankruptcy
If you cannot find any way to raise the money that you need and your creditors are not willing to offer you a payment plan, you may have no other option but to declare bankruptcy. This will put a hold on your debts and stop creditors from collecting, but deciding to declare bankruptcy is a big decision and you should think about it first. It will make it hard to get credit in the future, so it’s important that you try every other option first and only do it as a last resort.
These are your best last resort options when you simply cannot afford to pay your debts, but they have some big consequences so you need to try other methods like strict budgeting or debt consolidation loans first.
