The connection between money and mental health is a strong one. Poor mental health can make it harder to manage your money, as you’re more likely to indulge in impulse spending. Meanwhile, worrying about money can increase anxiety and worsen your mental health. It’s a self-reinforcing cycle that’s dangerous both to your wallet and your well-being.
In many ways, society does not prepare people for managing easy access to credit. Students are put into a position where they accept taking on tens of thousands of dollars in debt when they’re as young as 18, and the widespread availability of credit cards without financial literacy education can quickly put borrowers in a bad position.
How to Get Out of Debt
Feeling depressed or anxious about the money you owe is a major warning sign that you are in too much debt. If you’re struggling to make minimum payments, making payments late, choosing to pay one bill over another, or you can’t see yourself paying everything back any time soon, it might be time to talk to a bankruptcy trustee.
If you are considered insolvent, bankruptcy trustees can administer a bankruptcy or a consumer proposal. In fact, one of the solutions you can opt for is getting a bankruptcy car loan. These are measures you can take to find relief and settle your debts at a reduced rate. If you’re in the UK you can opt in for an IVA or a Debt Management Plan, for example.
Do Consumer Proposals Work?
You don’t have to file for bankruptcy to get relief. A consumer proposal is a bankruptcy alternative that doesn’t affect your assets. It can be an effective solution if you earn a stable income but can’t keep up with payments as you’re making them now.
Here’s how it works:
1) Working with a bankruptcy trustee, you propose a fixed monthly payment to all of your unsecured creditors. These payments can last for up to five years, and they are based on what you can afford to pay. This usually amounts to a significant debt reduction.
2) If the majority of your creditors accept your proposal, all unsecured creditors are bound to the terms.
3) Interest stops growing on your amounts owing and collection actions taken by creditors, including collection calls, must stop as soon as you file your proposal.
How Do Consumer Proposals Affect Credit?
Just like with bankruptcy, a consumer proposal will appear on your credit report. However, if you’ve been missing payments or have any debts going to collection, your credit report will already be in rough shape. By entering into a consumer proposal, you benefit from reduced payments and a clear timeline.
Being in debt has serious negative emotional effects, especially when it’s unsecured debt like credit cards or student loans. These include stress, anger, frustration, and depression. Financial trouble is often met by denial as well. It can be hard to face the fact that you need help, but prolonging the situation usually only makes matters worse.
There are ways to get out of the negative debt cycle. The first step you need to take is finding debt relief. Then you have an opportunity to restart your finances and do you mental health a favor.
