Credit card debt is something that affects tons of people that are out there, more than what most people realize. However, most people are not sure that they are one of those that are considered to be a person that is in credit card debt that should have them worried. Most times, the person does not even realize that they are hurting until it is too late. This is why there are some signs that the person should be watching for and if they start to see these habits in their own life, then they need to take a step back and look at their spending and make the appropriate adjustments.
First off, the person should look at whether they use their credit card for things that they should be using cash for? For example, do you find yourself having to use a credit card in order to buy your groceries each month? Or to fill up your tank on your vehicle? If so, then why aren’t you using your checking account. If the reply to this is that there is no money, then this is a sign that you are living beyond your means and this is something that is going to get you in trouble eventually.
Secondly, do you find that you are making the minimum monthly payment from month to month only to get nowhere since you use the card? This is a sign that you are simply using the card too much and you rely on it way too much in order to buy things that you may or may not need.
Also look at whether you take out other credit cards in order to get more things since you are maxing out the cards that you have. This is a sign that you have a definite problem and need to get help. So what does a person do to help themselves? They are going to find that budgeting is the answer, and they will find that it can be hard for the first few months to stick to this budget, but they are going to be able to do this better if they know that they are helping themselves out more in the long run.
Coping with bankruptcy can be tough. Depending on your situation, you might have to make payments for three years, you could lose your home (if you’re a homeowner) and it’ll have a serious impact on your credit rating for six years as well.
On top of that, there’s the effect it’ll have on your bank account – and on your ability to open another bank account, if that’s what you want / need to do.
Your ‘old’ bank account(s)
When a bankruptcy order is made, you’ll need to stop using your cheque book(s) and bank card(s) at once, and give them to the official receiver.
Your bank will ‘freeze’ your bank account(s), meaning you’d have to find another way of receiving money and making payments (the ones you’ve usually made by Direct Debit or standing order).
Your bank might let you keep on using your account, but any money in there when the bankruptcy order is made will be classed as an ‘asset’ in the bankruptcy, to be put towards your debts (although the official receiver or trustee may ask the bank to let you have some money for your essential expenses).
Please note that your bank has the right to use any money in your account to put towards what you owe it (if you’re carrying debt in the form of an overdraft, credit card or loan with that bank).
Looking for a new bank account
If you do look for a new bank account, it could be difficult to find a bank that’ll let you open one. You might choose to open a basic bank account (an account which is open to people with poor credit ratings).
Having said that, even basic bank accounts are often unavailable to people who’ve not yet been discharged from bankruptcy, so you might want to look specifically for a ‘bankruptcy bank account‘. This kind of account is usually open to just about anyone aged 18 or over – even if they’ve recently been made bankrupt.
Bankruptcy is a big step, but for someone who’s really struggling with their finances and unable to repay the money they owe, it could be the best way of tackling their money worries and making a ‘fresh start’. Finding out a bit more about your options can make the whole process that bit smoother.
