In some cases, it may be beneficial to release money that is attached to an asset or property during a financial crisis to eliminate debts.
If you have assets that can cover your debts when sold, it makes financial sense to consider this idea. These can be your valuable belongings such as your home, car, pieces of jewellery and other items or goods with value. You can sell these assets and use the proceeds to clear off your debts. This is a sort of debt self-managed debt solutions.
What assets can I easily sell?
Any items or goods that are valuable is referred to as your assets. The usual obvious asset is money saved on your bank as savings. However, but this may not easily accessible as it may require a notice period to release.
On the contrary, valuable items of goods may be easily sold such as pieces of jewellery, antiques, high-end watches or larger goods such as cars, bikes, or land which may take a while to sell.
What are the things to consider before selling assets?
When thinking of selling your belongings, there are things that you need to consider:
- Ask permission when the item or goods are acquired jointly
- Get valuations before putting it on sale
- Do your research to determine the market value
- Check whether it comes with fees when selling the items or goods
Moreover, you have to make sure that you are the sole owner of any assets that you’re trying to sell. If the asset is on HPA or hires purchase agreement, the ownership belongs to the finance company unless when fully paid.
Downsizing House to Pay Off Debt
You can try downsizing your home or estate and use the proceeds to clear off your debts. However, selling assets or properties has to be considered by the family members and not just by you alone. If the house is jointly owned, you have to come up with a joint agreement to sell it.
Before making any decision in selling assets or properties, you must also:
- Check whether downsizing the house can cover the debts
- Determine if you can afford essential costs for housing
- Consider the fees and costs of selling the property
Furthermore, selling your home is a huge decision to make and consider debt advice would be best before you step into this idea. More alternatives are available for you that suits your circumstances. Contact us, we can help you explore your options to avoid losing your home.
What should I do with the proceeds?
How you’re going to manage the proceeds and utilize it depends on how much you’ve raised in selling assets or properties. You can utilize the money in several manners. This will be based on how much you need to suffice your essential living costs and how much proceeds you got from your asset(s).
If your expenses are greater than your gain, you need to consider increasing your income and saving money.
If you’re able to satisfy the essential living costs and other obligations with money left to pay your debts, then you have to give a fair percentage among your creditors.
Moreover, you can do the following depending on how much you gain and your total debts:
- Pay off your entire debts in full if your proceeds can cover the whole debts
- Consider a full and final settlement through a lump sum offer. We can help you in creating a proposal and give you free advice on how this works
- Offer a lump sum amount as part of your payments and continue paying the remainder at an affordable rate
What can I tell creditors while trying to raise money?
If you’re raising money to pay off your debts, contact your creditors about your plan when you are certain how much money you’ll get.
You can make an offer on what you can afford while working on raising the money. You can send each of your creditors a copy of your budget that includes your income, essential costs and other expenses. This will indicate that your offer is fair and is based on what you can afford.
Besides, presenting your budget and reaching out to your creditors with pieces of evidence regarding your incoming and outgoings can help them understand your situation. You can also inform your creditors if you are having problems with your health or maybe considered vulnerable.