What options do you have if you can no longer pay your debts?

by | Sep 26, 2022 | Personal Finance

A number of factors contribute to people taking on debt, some within their control and others outside their control. A few of these reasons can be attributed to our choices, while others can be attributed to circumstance. The convenience of being able to use credit for everyday expenses, combined with the ease of getting credit and the variety of options available, makes us even more prone to falling into the debt trap. In reality, there are so many reasons why this may happen, from ignorance to sheer necessity. However, along the way it can very easily spiral out of control and one can find themselves unable to meet their debt obligations.

If you are struggling to service your debt repayment, you are not alone. And turning things around is extremely difficult, but it is absolutely possible. Also, contrary to popular belief it does not have to require a life changing event like a financial windfall or a drastic lifestyle change. Small significant steps also win the race.

The first step is always to properly assess your financial situation. Establish what kinds of debts you have, ascertain if your financial struggle is short or long term, select which of your debts to repay first, clarify whether there are any exclusions to protect your possessions, and finally find out what the law says about debt obligations.

Next, choose your way forward from the various repayment options you have available out there. The first option which arguably will often apply to all other methods of scaling down your debt is to adjust your lifestyle here and there to save more. The biggest reason most people give for why they cannot save is the fact that there is nothing to save after paying off all their expenses. However, it’s a marvel how much a little lifestyle change can achieve. Things like selling or downsizing your car, letting out part of your home, or moving to a cheaper option, packing work lunch instead of buying, and making saving a habit could definitely clear up more funds for taking care of your debt.

Another option is to try and negotiate with your creditors. Most creditors would actually agree to a reduced payment as they would rather receive a small amount rather than no payment at all. You could be able to reduce or temporarily suspend your payments. Also, if you have credit life insurance your insurance could step in and pay while you deal with the financial set back of perhaps losing a job or being incapacitated and unable to foot your debt bill.

The final and perhaps the most reliable way of dealing with your debt problem is debt counselling. Over-indebted consumers were offered debt counselling by the National Credit Act as a voluntary debt relief measure. Financially distressed consumers should consider debt counselling and approach a registered debt counsellor who can negotiate with their credit providers reasonable repayment terms based on what the consumer can afford.

In many cases, debt counselling is misunderstood by consumers, resulting in them missing out on the benefits and protection offered by it. By joining debt review consumers can take control of their finances because they would be able consistently pay off their debts while having enough money to cover household expenses at the end of the month. They would also learn to pick healthier financial management habits as debt review takes away the option of simply taking on more debt to solve financial problems.

If you are struggling to with your debt repayments, contact National Debt Advisors today, we can help.

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