Deborah Meredith is a VA/PA who has real life experience of the trauma of business insolvency and bankruptcy and is bouncing back and starting again. She is not a financial advisor, lawyer or insolvency practitioner. Paul Harrison sits down with her to share her top 3 tips on coping with financial difficulty or bankruptcy. Her tips are her own, borne from experience:
Tip 1: Don’t panic
This may seem trite but when faced with insolvency, bankruptcy or financial difficulty the first emotions are fear and panic. In my experience panic begets panic and just creates more problems. Accept the situation as it is and work out how you’re going to improve things. You need a clear head to work through the paperwork involved in these situation and you’ll need your wits about you to ensure it doesn’t happen again.
Tip 2: Take responsibility
Whilst it’s easy to blame everyone else and the recession for the situation, and I accept that there are very often external contributing factors, blaming others won’t help you. Right NOW you have to take responsibility for the situation and make a plan of action to start getting yourself back into the black. Don’t expect this to happen overnight, it will take a long time. If you’re bankrupt it’s going to sit on your credit report for six years so allow yourself that amount of time to get your finances in order. Then make your plan and stick to it.
Tip 3: Live within your means
Oft quoted but true I’m afraid. There’s no easy way to get your finances back on track (unless you win the lottery). It’s going to take time, effort and some personal sacrifice. Look at where you can make savings in your expenditure. Don’t spend the money unless you really need to. When you start to track every penny you’re spending you’ll be surprised at where the money goes and where you can cut back.
Q&A: Deborah answers George Savva’s questions.
George Savva is originally from Johannesburg and now lives in Newbridge, Gwent where he is a trainer and coach running his own business called “It Takes… 7 Seconds”. In recent years times have been tougher than usual and George asked the following questions:
Q1: Is it true that if you become bankrupt your debt dies with you?
That’s a grey area. If you have absolutely no assets to sell and no disposable income left after going through your income and expenditure allowance with the trustees of your bankruptcy then yes, in effect the debt dies with you however, if you have assets and/or some disposable income after going through the income/expenditure process then the assets are liquidated and your disposable income taken to redistribute to your creditors.
Q2: How I can keep track of my financial situation?
Treat your personal finances as you would your business finances. Whenever I work with a small business or an individual one of the first things I do is get them to fill in a simple income/expenditure spreadsheet detailing everything they know about. I also get them to create a cashflow forecast for both the business and personal finance again, detailing everything they can e.g. car MOT and repairs, house repairs, holidays, new school uniform for the kids, Christmas etc. If you know something is coming up but you don’t have the exact cost create a budget for it and stick to it.
Q3: Should the worst (i.e. bankruptcy) happen, how long will it affect me?
Again, this is another grey area as all cases are different and I can only talk from my personal experience but the reality is that it will sit on your credit report for six years. As long as you co-operate fully with your trustees you can expect to be discharged from the bankruptcy after one year. Use the next 5 years to rebuild your credit history. In terms of how it will affect you emotionally, that’s difficult to say. Some people bounce back really quickly whilst others disappear into a fog of perceived failure for years. Just as we all deal with grief and change differently, so too do we all deal with bankruptcy differently and at our own pace.
Deborah blogs and shares resources about bouncing back from bankruptcy at www.bouncingbackfrombankruptcy.com. She can be contacted via www.deborah-meredith.com
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