How To Clear Your Debts

If you are like millions of other British, you have a mountain of unsecured debt. You may owe money to credit card companies, store owners, the IRS, or even your own bank. Whatever the case may be, you probably need help paying off this debt. If you’re drowning in debt it’s time for you to get to the bottom of it. You need to understand your options for getting rid of this debt and where to turn for help.

That’s where we come in! Our article gives you easy-to-follow advice on how to get out of debt fast… no matter what kind of financial mess you’re in. We cannot all be as lucky as the cleaner won the world record Eurojackpot online prizebut there are other ways.

Debt is an IOU. An IOU is something you give to someone else which says “I will pay you back in X amount of time, with Y interest.” So, for example, let’s say you lend your friend £100 and you promise to repay him £110 (he owes you £10 more than you lent him) in 30 days.

Most personal debt is not caused by “paying-day loans” or other risky behaviour. No. Most personal debt is simply a result of unexpected life-events, such as getting sick, having a child, losing a job, or experiencing some other financial crisis.

Additionally, the biggest problem with taking out a personal loan is not the initial interest rate, it’s the fact that many people find themselves stuck paying back a huge amount over a long period of time. This is especially true when you factor in the vig (aka ‘teeth’) which is generally much higher than the initial interest rate. This means that even at an incredibly low interest rate, the total amount you have to pay back is still very high.

The most common ways people get out of debt are by reducing their expenses, reducing their consumption, selling their possessions, working longer hours, getting a second job or buying a lottery ticket. The chances of winning the National Lottery are so remote it makes it hard to consider this a viable method for reducing debt.

Recognising the difference between good debt and bad debt is an important part of financial management. Mortgages, council tax and child maintenance debts are usually bad debt. They should be paid first, as the consequences of not paying them are far greater than the consequences of ignoring other forms of debt.

There are several strategies for getting out of debt. One of the best is to get expert advice as soon as possible. Another is to pay off high-interest loans first, consolidate your debts, and work to clear up any negative items on your credit report. However, the best advice is to avoid getting into debt in the first place.

If budgeting, consolidation and prioritisation won’t solve your debt problems, you may want to consider other options. One option is bankruptcy. This is when your debts are written off and your remaining debts may be paid by your income or your assets.

It’s important to seek advice before you file for bankruptcy. If you do go down this route, you may be able to arrange a debt-management plan where you would make a monthly single payment to your creditors based on what you can pay or an individual voluntary arrangement, which would allow you to keep some of your assets and repay your creditors over time.

Another option if you are on a low income with very few assets is to apply for a debt relief order. This will temporarily stop your payments on all unsecured debts (such as credit cards, store credit, and personal loans) for one full year. If your situation hasn’t improved, the debt is written off completely.

A lot of people are really struggling financially because of Covid-19. And the temporary emergency measures that the government has put in place, such as furloughs, temporary benefit uplifts, and creditor payment deferrals, haven’t helped at all. In fact, they have made things much worse for many people.

Taking action is the first step to getting your life back on track. If you feel you can’t pay off your credit card debt because of money worries, talk with your creditors and see if they’ll be willing to work something out where they’ll allow you to pay off a little bit each month and you’ll agree to make the rest of the payment at a later date.

It’s important to let your creditors know what you can and cannot afford to pay. This will help them decide whether they want to work with you or not. Finally you should always remember that debt advice should always be confidential, impartial and free.

 

About Charles Knox 1281 Articles
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