Nobody likes talking about the D-word, but it’s almost inevitable for all of us. Debt will rear its ugly head at some point in your life, and it isn’t always a bad thing. Having a debt because of a mortgage can be beneficial because you now own a house. Nevertheless, when debt starts to mount up, it becomes a significant financial problem. Your whole life is thrown into disarray as you owe lots of money and can’t pay it back. The worst thing about debt is that the deeper you fall into it, the harder it is to get out. As a result, you fall deeper than ever!
What do you do when you’re in debt? If you’re struggling to keep up with debt repayments, there are a few things you could try:
Consolidate multiple debts into one debt
Debt consolidation is where you have lots of debts and merge them together. Why would you ever want to do this? Well, paying money to lots of different institutions is a struggle. They all have different interest rates, fees, charges and rules. It’s also much harder to stay on top of multiple debts compared to one. Usually, debt consolidation comes in the form of another loan. You borrow money, pay off all of your debts, then have the loan to repay. Now, you have a more manageable debt – which is usually on a steady interest rate with an affordable payment schedule. It can still take time to get out of debt, but you should feel less stress and actually be able to stay on top of things.
Contact the debtors to restructure your debts
Another idea is to get in touch with the companies you owe money to. Talk to them about your problem and explain that you want to pay them back, but you’ve fallen on tough times. Usually, that’s why most of us end up in debt. It’s not because of poor financial choices, it’s because of things outside of your control. For example, you borrowed money when you had a successful career, but sadly got let go because of the coronavirus pandemic. Through no fault of your own, you have no income and have fallen behind on your debts. So, talking to debtors can help you restructure things and create a better payment plan that’s more lenient. In extreme cases, they might even waive the interest payments! It’s rare, but it’s worth a try.
Think about bankruptcy
If you grew up playing Monopoly, bankruptcy became a thing associated with losing. People think that you lose all your money when you go bankrupt, but that’s not true. In essence, you will be given a fresh start by absolving your debts. It’s not great for your credit score, and you’ll have to pay as much as you can, but it does leave you with no debts to worry about. You need to work with top solicitors to file for bankruptcy, and they will also explain all the essential nuances. It’s a last-ditch solution, but one that can help you get a stranglehold on your financial life.
Please remember, this is not financial advice, it is merely a collection of possible suggestions. It is always wise to speak to a qualified financial adviser if you want professional help with your debts.