If you are also aiming to be debt-free at the end of this year, you should find different approaches on how you should deal with your debts. This path might be slow and grueling but if you keep a positive mind and maintain diligence and hard work, you will definitely achieve your goals. As long as you still have remaining income after paying your monthly expenses, you will have different options to get out of your debt troubles.
- Create a budget and contact your creditors to arrange a solution.
- Settle your debts.
- Seek help from a nonprofit credit counseling agency.
- Enter a legitimate debt management plan.
- File for bankruptcy.
Most of the time, the best way to deal with your existing debts is to fix them on your own.
You can start by listing all your outstanding debts and making a budget by listing your income and expenses. Find ways to reduce your expenses as much as possible and if there are chances, increase your incomes, then revise your budget according to this information. You can use financial software from IRESS if you are really eager to get out of your debts as soon as possible.
After having the budget, have a certain amount that you can devote to pay your debts every month. In this case, you must also determine which one of your debts is your priority, which one should be paid first, and the ones that are less priority.
After knowing that you can definitely afford to pay your debts every month, it is time to call your creditors and discuss the payment scheme. Let them understand your situation. Either you have suffered a sudden loss of employment or you are going through personal problems. At some point, it is important to suggest several solutions such as a temporary reduction of your monthly payment or skipping some payments but adding the loan term.
When you contact your creditors for possible adjustments on your loan, make sure that you won’t skip the payment this time. You need to ensure your creditors that you can pay your debts and that you are willing to communicate with them all the time.
In some cases, there’s a chance of paying your debt such as credit card debts by paying it in a lump sum. Always remember that when you settle a debt, the amount in which the creditor forgives could be taxable.
If you find yourself in the dark after numerous attempts to work out a solution for your creditors, do not hesitate to ask the help of a credit counseling agency. These agencies are great in providing money management education, debt counseling, budget counseling, or house counseling. The Credit Counseling agency can also help in reaching out to your creditors and creating a debt management plan that can both benefit you and your creditors.
The best way to avoid debts is NOT to live above your means. Live a frugal life and use financial management software like the ones from IRESS to help you handle your finances.