When to declare bankruptcy

Being declared bankrupt may be the last thing that you would want. However, it may be better to be in this situation so as to salvage your financial condition. When you find yourself unable to pay off your creditors and when you are barely making enough money to cover monthly expenses, declaring bankruptcy may be the best option. So, when would it be best to throw in the towel?

Indicators that your financial position is at risk

  • You are not really sure of the amount of money that you owe. It is an estimated amount, but not an exact figure.
  • Bill collectors are calling you
  • You rely on the use of credit cards to settle payments for basic necessities
  • The payments that you make on your credit cards are quite minimal
  • You are considering debt consolidation so as to get out of debt
  • You feel anxious and not in control whenever you think about sorting your finances
Filing for bankruptcy

Filing for bankruptcy

The above indicators paint a very tough financial situation. In such cases, all that may be occupying your mind is the huge amounts of debts that you owe and the reality that you may possibly not pay them off anytime soon. When you discover that you owe more than you earn and may afford to pay off the debts, it is an indicator that you should probably file for bankruptcy. Note you should earn an income which is below the level stated by the law so as to qualify for bankruptcy.

However, if you are to consider filing for bankruptcy, do note that not all debts may be discharged. The following debts should be paid even if an individual has been declared bankrupt:

  • Student loans
  • Taxes
  • Criminal restitution and court fines
  • Personal injury caused by driving under the influence of alcohol or drugs
  • Alimony
  • Child support

When you are ready to be declared bankrupt, you should ensure that you will disclose all your assets and liabilities. Failure to do so may mean that some of your debts will still need to be paid off even after being declared bankrupt.

You may declare bankruptcy after ensuring the following areas may not be adversely affected:

Pension plans and insurance policies

Find out if your policies will not be affected by bankruptcy. Some insurance policies and pension plans are protected by state laws and are not affected by bankruptcy proceedings.

Mortgage

You should ensure that you will not risk losing your home. The challenge of paying your mortgage may be made easier if your other debts will be discharged. Filing for Chapter 7 bankruptcy may lead to the loss of your home if a lot of equity is invested in it. It is advisable to file for bankruptcy under Chapter 13 if you have a higher income.

Credit card debts

Credit card debts

Credit card debts

These may not be discharged if you spent beyond your means or if you were not honest in your card application. Although bankruptcy is effective in wiping out such debts, if the mentioned cases apply to you, filing for bankruptcy may not be a good idea.

Declaring bankruptcy is not an easy decision and requires a lot of factors to be considered. However, when you admit that you have a problem with your finances and need a solution, you are on the right track. You then have to weigh in the options that may solve your problem and decide if declaring bankruptcy is the best among them.

What Should You Do When Your Employer Stops Paying You?

No worker can do without being paid because they depend on their wages to support themselves and their families. A person can love his or her job and enjoy associating with co-workers but that just isn’t enough. As a rule of thumb it is advisable for employees to take an active role in regards to their paychecks and not only keep track of the hours they work but to also verify that they are being paid the correct amount.

 Rectify a delayed or incorrect paycheck

Rectify a delayed or incorrect paycheck

There are various things that employees can do to rectify a delayed or incorrect paycheck: speak to the employer, follow the proper grievance procedure for his or her agency, speak to the trade union, meet with ACAS in the UK, and/or meet with a tribunal. The first thing someone should do who isn’t being paid properly is speak to his or her employer because there could have been an honest mistake made such as a digit accidently omitted from a bank routing number or later than usual mail delivery.

If there wasn’t an honest mistake the employee should orientate him or herself towards his or her employer’s grievance procedures and follow the procedures per the agencies policies and if there isn’t a formal grievance procedure, write a letter with documentation to the employer explaining the situation with an appropriate request for the situation to be rectified.

At this point if nothing has changed or improved the employee should request assistance from his or her trade union if there is one. If available, employees should join a trade union because they are in a stronger position to negotiate with employers on behalf of employees than employees are by themselves.

The employee can also take the employer to a tribunal if his or her grievance did not obtain the results he or she was hoping for. However, the employee should notify ACAS before taking the employer to the tribunal. ACAS refers to a company that offers individual support to help with employment difficulties. The organization seeks to see if the employer will negotiate with them without going to the tribunal.

This is done by filling the early reconciliation form which is available on the ACAS website. Once an employee has gone through all of the appropriate steps and the issue has not been rectified, it is advisable to quit. What tasks are there for you? How do you benefit from the job? If these questions can’t be answered by the employer, then there is no point working without pay.

Take employer to tribunal

Take employer to tribunal

If the employee is completely sure that his or her employer is not adhering to the Employment Standards Act law, he or she can take it a step further and file a claim with the Labor Board. However, If the employer promises to rectify the situation the employee should follow up frequently until the situation is either rectified or he or she obtains other employment.

If it appears that the employer isn’t going to follow through with his or her promise the employee should update his or her resume and begin interviewing for other jobs. However, if the employee decides to stay in the workplace, he or she should stay oriented to any changes that are made within the organization. The employee might want to keep his or her reasons for remaining with the organization private as to avoid any further exploitation from the employer.

The best advice is for the employee to quit and look for an employer who is in a position to pay him or her regularly and on time. However, many employees struggle with this decision because they are scared of becoming unemployed, experiencing a hard life, and being unable to provide for their families. They hold on to the hope that the employer will have a change of heart and pay them appropriately. In this situation the employee should take the time to follow the proper procedures and effectively deal with the issue at hand.

How will you repay the principle one day?

Taking a loan may be an easy and fast process. However, if you fail to plan how you will repay it, you are going to have a hard time. Financial planning and management go a long way in ensuring that you have a good financial position and that you are able to clear debts in the shortest time possible.

An endowment mortgage is defined as a loan arrangement in which the borrower pays interest only to the lender while the installments of the principal are paid into a life insurance policy. The maturity date of the policy is similar to that of the mortgage. These plans are usually run for a period of 10 to 25 years.

An example of this is when a borrower has an interest only mortgage valued at $200,000 for 15 years, they are expected to pay the interest on the amount borrowed each month. The full amount of the principle, which is $200,000, is expected to be paid at the end of the term of the mortgage.

  • Paying off the loan as soon as it matures

Repay the principle as soon as it matures

Repay the principle as soon as it matures

The main aim is repaying the principle. And it is not simply paying it off, but doing so within the soonest and the shortest period of time possible. Therefore, a lot of sacrifice and discipline will be required so as to meet this goal. Note that the value of the principle will decrease over a period of time. This is due to inflation.

As a borrower, you should make arrangements on how you will save up the money so as to pay off the loan when it matures. The lender plays no role in making loan repayment programs. You may pay off the principal in the following ways:

  • Frequent savings

You may have a standing order placed on your account so as to instill a sense of saving discipline. You may direct your banker to send money frequently from your checking account to a savings account. The amount of money that you pay towards your loan may be increased. This is possible if you have some disposable income after settling your monthly expenses.

  • Extra cash flow

If you happen to receive an annual bonus or an income tax refund, this extra source of income can be used to cover the loan repayment.

  • Investing in income generating business

Proper use of your money involves investing it in high return ventures. These profits will give you an extra source of income and such cash flow will enable you to have more ability to pay off the principle.

  • Inheritance and gifts

Inheritance & gifts

Inheritance & gifts

If you are lucky enough to receive gifts or inheritance, you will be able to use this to pay off the principal.

Proper planning ensures that you will be able to pay off your loan when it matures. With this, you will avoid less attractive options such as extending the mortgage term, remortgaging or downsizing.

As the loan repayment is an expense that you are aware of, good planning ensures that you will not be overwhelmed when the payment is due. As windfall payments such as inheritances or bonuses are not a sure thing, your efforts during the mortgage will go a long way in securing your finances, and even your home and other assets, when the mortgage is due.