Today debt is becoming common place all over the world. Even in India that originally boasted about having the highest savings rate in the world, debt is slowly spreading its tentacles. Many people, especially youngsters fall prey to the easy availability of the credit. If you are in this position, then here are some tips to get out of your debt.
- Inform your spouse/parents: This is the biggest mistake many people make. They hide their debt situation from their near and dear ones. Don’t do that. Discussing your financial problem with them will help you solve your debt problem.
- Draw a repayment plan: Chalk out a plan to repay your debt. Cut down on unnecessary expenses like shopping for latest gizmos, eating out at a restaurant or going to movies at a multiplex. Use the amount saved to pay off your debt.
- Switch over to low-cost loans: Replace the loans with high interest like credit card debt and personal loan to low-cost loans like loans against securities, NSC, KVP and mutual funds. It will save you the money by reducing your interest costs.
- Opt for one time settlement: Many banks would prefer settling outstanding dues with their creditors. They will try to offer you a settlement as they would be happy recovering even a part of their dues, instead of letting the entire sum go down the drain. If you get such an offer, opt for it. But ensure the bank gives you a settlement letter and declare the account closed.
- Restructure the loan: Banks let you restructure the loan, in such a way that you pay higher EMIs when your financial condition improves. Write a letter asking the bank to offer you this facility.
- Declare bankruptcy: This should be your last resort and should be used when everything else fails. Approach the bank and declare your inability to pay and also tell them you don’t have any assets. The bank will then take up the matter with the court, who will then attach your assets like property. Then it will commence the liquidation procedure to pay the bank. It is a complex process that can last for 3 years.
great post!
Debt settlement definitly seems to be seen as a realistic strategic option for consumers suffering with credit card debt. For serveral years I have been watching the trend pretty closely and it is quite difficult to understand what you receive for the investment in debt settlement. It is obvious that there are a great number or service providers in the market that provide fantastic solutions and the customers honestly receive great benefit, but I am also aware there are a group of service providers available today that are focused on collecting fees and enrolling new subscribers. This is why there is brand new federal regulation surrounding the debt settlement industry. My best friend contracted a debt consolidation operation and was very very very content with the result.