Having debts is not exactly unusual these days and many of us with credit cards, personal loans and mortgages, are all indebted to a lender if we have a balance outstanding.
There is however a tipping point, where debt levels become too high or your ability to repay what you owe becomes hampered by an event such as losing your job.
A sudden loss of income or some other unexpected change of circumstances, or even the fact that you might have taken on too much debt, can all create a great deal of anxiety for many of us.
There are options available if you are feeling the strain and need to reorganise your finances or get some help, such as Debt Consolidation for example. The main thing to remember is the need to take action rather than hope that all of your financial pressures will just disappear.Â
Range of options
There are a range of formal and informal options open to you depending on the severity of your financial situation and your ability to make repayments.
The formal options include entering into a debt agreement, officially declaring yourself insolvent and entering into an arrangement with your creditors, or possibly filing for bankruptcy.
You should think very carefully about taking one of these options as a way of resolving your debt situation, as actions like filing for bankruptcy have some very serious sort and long term implications attached to them.
The informal options consist of talking to a number of different people about your financial situation such as a financial counselling service or a debt agreement administrator.
Before it gets too late
Even the informal options have implications and consequences that you should always be aware of before entering into any sort of agreement with your creditors.
There are plenty of things that you can do yourself to try and resolve your financial situation before having to seek some external help in the form of advice.
An important point to remember is that it is always important to talk to your creditors and explain your position to them, as they will often give you some more time to pay or agree to renegotiate repayments based on your current finances.
Always talk to anyone you owe money to and make them aware of your financial difficulties, as they are far more likely to try and work with you to help you resolve the problem when you are in dialogue with them, than if you ignore their demands and calls.
Work out how much you owe
You really need to be aware of the extent of your debts before you can put together a viable plan to get your finances into order.
Start out by listing all of your debts and making a note of the current balance owing on each loan, credit card and any other borrowing that you have. Also make a note of the interest rate that you are being charged on each debt.
If you are adept at using a spreadsheet, put all of the information together using your PC or simply write it all down. The most important point to remember is that the list has to be a comprehensive breakdown of everything that you owe, as there is no point missing out certain debts or trying to make the situation look better than it is.
The only way that you can create a workable and feasible plan to sort out your debts, is to work out exactly how much you owe in total.
One method that can work is to work out a plan that involves setting some targets and goals for repaying your debts and start paying off debts working from the highest amount down to the lowest in order of priority.
Look to prioritise paying off the debts with the highest level of interest rate first and work on the basis that every time you manage to pay off a debt, this will give you extra money towards payments to clear off the other debts.
It can sometimes work out to consider using debt consolidation as a way of clearing off multiple debts by taking out a new loan that gives you enough to do this and leave you with one monthly payment, which might be lower than the combined total of all of your separate payments.
If you are in the red, the main thing to do is to take positive action to try and improve your financial situation and there are plenty of strategies that may well help to ease the burden.
With over 10 years experience behind him, Colin Gray is the founder of Capital Debt Solutions in Brisbane. With Colin and his teams experience, personal attention and care they can proudly boast the highest acceptance rate in Australia with the Lowest Debt Agreement failure rates. Colin and his team at Capital Debt Solutions are trusted and recommended by more than 6,000 Australians.
Feeling Clever? Join our newsletter!
Subscribe to get the latest from "Clever Dude."