Many Americans are scared that they wouldn’t be financially stable this year. The pandemic is still around, and no one knows what will happen to the economy. Currently, it’s estimated that many of the world’s economies would shrink by 2.4%. This can be devastating for anyone living within these countries as there is a possibility that they may lose their jobs. This is already happening in the US.
Last year, an estimated that 7 million Americans had lost their jobs. There are also thousands of small businesses that have permanently closed down due to the pandemic. Because of this, protecting your assets should be a priority this year. You can lose them easily because of how unstable the economy is.
Remember that bankruptcy happens to families and businesses alike. However, it’s pretty challenging finding ways to protect your assets. Thankfully this article covers the simplest ways you can protect your assets. Anyone can do it given enough time and patience. But first, let’s understand the given scenarios where you might lose your assets.
Bankruptcy
Bankruptcy is the leading reason why people lose their assets. The idea of bankruptcy does not necessarily mean that you don’t have any money. It just means that the debts you have attained surpass your ability to pay for them. This can be devastating if you still have huge loans to pay, like a mortgage. But, believe it or not, most people are capable of paying big loans like mortgages. It’s part of the budget of every American family, amounting to $10,000 every year. The main reason why people go bankrupt is due to personal credit.
Many Americans love to use their credit cards even during the pandemic. It’s even getting promoted as a safer way to pay since it uses no cash. However, this is the reason why most people go bankrupt. They use their credit cards, not knowing that they can’t pay for them. When you’ve maxed out two or more credit cards alongside a mortgage, then you have a good chance of going bankrupt, as the wage of an average American household isn’t likely to pay for that.
In some situations, filing for bankruptcy can be beneficial for you. If you’ve analyzed your financial situation and see that you won’t lose your most valuable assets, then it’s worth filing for bankruptcy. It’s one of the effective ways you can protect your assets.
To file for bankruptcy, you need to be eligible for it. If you want to know if you’re eligible for bankruptcy, you can compare your household income to your state’s median income. If your household income is lower than the median rate, then you can file for bankruptcy. Once you’ve filed for bankruptcy, you can have a hearing with your creditors to settle your debts.
Refinance
If you have any debts or assets that you have fully paid, it’s time for you to refinance them. This will ensure that you have enough cash on hand to weather any problems you might have this year.
The act of refinancing is the revision of a previous credit agreement. If you’re planning to buy something costly this year, you should consider refinancing an old debt or mortgage. However, it’s also suitable for paying other debts you might have this year.
The good thing about refinancing is that you can determine how much you pay and when you are going to pay for it. Technically you can get a big loan and pay for it longer than you usually would but in smaller amounts. Additionally, if you refinance at a time when interest rates are low, you might not even have to pay that much. This is an efficient strategy if you don’t want creditors to take any of your assets, as you can use the loan to pay for the debts you have right now.
Insurance
Your assets should have some insurance covering them. If you don’t have any insurance policies on your assets, there’s a considerable chance that you can lose them from disasters and debts, especially when the economy is unstable.
Each of your assets, such as your car or your home, have their insurance policies. For example, your car has vehicle insurance. There are varying insurance policies that you can for your home. For example, if your home was manufactured, then it initially has mobile home insurance. However, if you bought your home from a realtor, you’re going to have to get a unique insurance policy to cover that. If you have specific insurance covering your business, you can consider getting umbrella insurance to cover all of it.
Umbrella insurance is an extra insurance policy that covers other insurance policies you might have. It adds extra strength to those policies and ensures that you can always claim something when something does go wrong. It’s great if you’re planning to add an extra layer of protection to your assets.
Here are the simplest ways you can protect your assets against creditors this year. You must do these things as early as now because the longer the pandemic stays, the higher the chance you might lose your assets. To protect them the best way you can.