Breaking out of your debt sooner

Breaking out of your debt sooner

by Christina M

Debt problems are plaguing many Australians. Whether it is out of control credit cards or other loans and bills, thousands of people are barely keeping their heads above water and any small unforeseen event could tip the balance into the direction of personal insolvency.So what are the strategies one should follow to prevent debt problems from piling up?

Make all repayments on time

Being disciplined in making your loan and bill repayments is critical. If you fail to make repayments when they fall due this can affect your credit history and therefore your ability to qualify for debt consolidation loans as well as credit card balance rollover deals.

While it is best to work at reducing your debts as fast as you can, sometimes consolidating into a cheaper loan or rolling over debts into an interest free credit card can help. These strategies require the borrower to have a clean credit history.

Do not apply for new loans or cards

If you fall into trouble the worst thing you can do is borrow more money as eventually your debts will catch up with you and then there will simply be nowhere to go.

If you take out a new consolidation loan, then you should close all the cards or loans that you are consolidating to ensure that your debt is reducing rather than expanding.

Check your credit report

Make sure that you know what your credit report says about you. There may be bad credit marks that either you know nothing about or that have been placed there by mistake.  These marks can have an impact on your ability to repay your loans or qualify for debt consolidation.

If your credit report has erroneous information on it – it can and should be corrected. You should start out by contacting Veda Advantage to inquire about a free copy of your credit report.

Be disciplined and follow a budget

You will never break out of a debt cycle if you do not make an effort to document your income and expenses and prioritize these. This is the first step to developing a budget which allows you to achieve financial goals such as repaying credit cards or saving for a holiday. Financial discipline is essential. If you do nothing, nothing will change.

Speak to credit providers ASAP f you cannot afford repayments

Once you realize that you may not be able to meet your monthly payment this month, contact the credit provider immediately and explain the situation. In most circumstances you should be able to negotiate a reduced payment plan for some time to allow you a chance to get back on your feet.

Failing to alert banks and finance companies of your situation before going into arrears can impact your ability to negotiate reduced payments and create a risk that your creditors will force you into bankruptcy, here is good website.

Make sure that any deal you negotiate or accept is affordable in your current situation. There is little value n agreeing to pay $500 per month instead of $900 – if you are still not able to meet these reduced payments.

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