Overwhelmed By Debt? What Are Your Options

Being overwhelmed by debt can feel like you’re living a nightmare. If you can’t see the light at the end of the tunnel, debt can lead to all sorts of problems, including depression, alcohol and drug abuse and homelessness. It’s important to address your debt problems, no matter how frightening they may seem. So, what are your options when you feel like your debt is snowballing?

Wait

If you know that your financial situation will improve within the next few weeks or months, all you’ll need to do is brave the storm for a bit longer. However, that doesn’t mean you should ignore the letters and phone calls from your lender. Contact your lenders and make them aware of your situation. More often than not, lenders are happy to come up with a solution, as long as they know they will get their money. Make a financial plan and show your lenders how you intend to pay the money back as soon as you’re back on track.

Negotiate

Burying your head in the sand won’t get you anywhere. You have to deal with debt head on. If you know you’ll be unable to pay your loans back anytime soon, you need to contact your creditors. However, you don’t have to do this alone. There are many companies, like repair.credit, who can offer you great advice and even contact your lenders on your behalf. This usually results in a negotiation where you’ll have to decide on an amount you can afford to pay back in the meantime. It’s also worth looking closely at your contracts. Some lenders offer a repayment break in the event of job loss or the inability to work after injury.

Financial Planning

Sometimes, getting your debt under control is all about budgeting your finances in a better way. If you need to repay loans, you may have to prioritise your payments from now on. For example, paying your rent is much more important than paying your TV subscription. Making little cut backs here and there could mean you save a significant amount of money and you’re able to pay back more to your lenders. Being frugal is certainly worth it for the peace of mind you’ll get when you’re able to make your payments.

Bankruptcy

If you’re unable to come to an agreement with your lenders and you’re unable to get help for the amount of debt that you’re in, declaring bankruptcy could be a good option. Your assets will be liquidated in order to pay your lenders back, but anything you’re unable to pay will be discharged. There are times when the court may decide that you can keep your assets, as long as you’re able to make payments towards your debt for a certain period of time. For many people, this is a way of starting again without having everything abruptly taken from them. Bankruptcy does give you the chance to plan an escape route and eventually get back on your feet.

Debt is an awful thing to have to deal with, and yet many of us cannot live without it.