Bankruptcy when said about individual or a business, it means the financial situation where someone is unable to pay its debt. This word is used in legal term mostly, but in fact, this is synonym of “insolvency”.
One thing you need, to avoid bankruptcy is: always spend and make financial commitments as per the resources available, try your best to do not rely on credit transactions for most of your requirement. Always spend smartly, see your income resources and then make any buying decisions.
Nevertheless, how can you manage the insolvency when some uncertain spending has absorbed your income and pushed you towards heavy debts?
To deal with a debt problem, you will need to do the followings:
Schedule your debt payments
If you have money to pay off your debts, you must pay the priority debts first .These dents are urgent as comparative others because significances of no paying them could be serious for another debts.
Less urgent debts, credit card debts, overdrafts as well as different loans. These kinds of debts would be known as no priority debts.
Types of Priority debts
Priority debts include:
If you do not pay on time, you could lose your home
You can have your supply disconnected if you do not pay on time
You will be subject to legal prosecutions if you do not pay
This may result on losing control over your vehicle
You could be sent to secure for nonpayment of VAT or income tax.
It is a criminal offence to use a television without a license. You could be fined.
Types of Non-priority debts
You cannot be sent to prison for not paying non-priority debts. However, if you do not make efforts to pay and extend the period without the consent of your creditors , they may take you to court. Type of non-priority but still important debts for long term survival are:
Considering the importance and severity of these debts, careful look at the timings at which these debts are due a useful tool to manage your financial position and avoid insolvency.