Debt Service Uk

Posts Tagged ‘Self Discipline’

Being in debt is no fun, especially if you are struggling to make ends meet. Because debt is a complex issue but there may be more than one solution. This article will outlines 12 common methods use by most of debtors to get rid of their debts. Among these 12 debt solutions, there may be one or more options which you can use to solve your financial problem.

4 of the 12 methods: Self Repayment Plan, Debt Settlement, Debt Consolidation, Debt Consolidation Loan had been discussed in part 1 and part 2. This part will focus on another 2 common debt solutions: Credit Counseling and Cash out Refinance.

Credit Counseling

If you do not have self-discipline to work out a budget plan for yourself and a repayment plan with your creditors, then stick to it to get your debt payoff; or you debt balance has reached to an unbearable level, you should consider to get service from a professional service from credit counseling agency.

Through the credit counseling, the counselor will discuss your entire financial situation with you and will advise you on how to realistically manage your money and your debts, help you develop a workable budget, and usually offer free educational materials and workshops.

Normally the credit counseling agency doesn’t consolidate your debts. They will work out payment plans with lower interest rate and fees for your outstanding debts. What you need to do is to make one monthly payment to the counseling agency, which will pay all your creditors. Credit counseling programs usually does not hamper your credit rating and if you stick to the plan, it is possible for you to get rid of debt in 3 to 6 years.

Although many credit counseling organizations are nonprofit and work with you to solve your financial problems. Be caution on the hidden fees, some credit counseling organizations charge high fees which may be hidden that can cause more debt. Hence, before you sign up any of the debt management plan offer to you by the credit counseling agency, review their fee structure and ensure the debt management plan is in line with your financial condition. Try to avoid the service which requires you to pay for an up front fee.

Cash out Refinance

If you have equity such as a home, you could refinance it to cash out money for your loan repayment. Typically you are allowed to refinance up to 75%, (sometimes 80%), of the value of the property on conforming loans. For example, if your home is now valued at $150,000 and your loan balance is $70,000, you might be able to get a new $150,000 x 75% = 112,500 mortgage. That would allow you to repay the existing $70,000 balance and use the $42,500 for your financial needs.

Comparatively, refinancing loan has lower interest compare to other personal loan and it has various repayment period which you can choose the one that meet your repayment capability.

In Summary

Credit counseling agencies have wide expertise in handling debts and they have various options for debtors which one of it may suit your financial situation. Get the service from them will help you to have clear picture on the options available for you in handling your debt issue.

If you have built your equity from the past such as bought a home, and now you have financial crisis, this equity will play an important role to save you from the crisis and pull you out from debt.

See you on part 4 for more debt solutions

Being in debt is no fun, especially if you are struggling to make ends meet. Because debt is a complex issue but there may be more than one solution. This article will outlines 12 common methods use by most of debtors to get rid of their debts. Among these 12 debt solutions, there may be one or more options which you can use to solve your financial problem.

Please note this article will be divided into 5 parts, this part will examine 2 of the 12 methods: Self Repayment Plan & Debt Settlement.

Self Repayment Plan

The ideal way to start your debt solution program is with the self repayment plan. Self-discipline is the key factor to ensure the success of this method. Before you come out with your debt repayment plan, you need to understand you current debt condition; detail out all your debts: mortgage & car loan, credit card and other personal loans. Then list down all the fixed expenses such as power, phone, insurance, food and other expandable such as entertainment, gym, membership, dinner at restaurant & etc. Then record down your monthly incomes from salary, part-time job and other source of incomes.

Tailor your budget plan in line with your debt repayment plan. Budgeting is very important aspect in self repayment plan; you need to make a budget plan which will cut down or eliminate unnecessary expenses, has a saving of portion of your money for emergencies and unexpected expenses while focus most of your money on your debt repayment.

If possible, you might also consider a part-time job or look for other opportunities to increase your monthly income and these extra incomes can be utilized to fund your repayment plan. If you feel that you might not have a good self-discipline to follow your repayment plan, you might want to consider in set up a direct payroll deposit and automatic payments with your bank.

While running your repayment plan, you should not take in new debt and follow strictly what you have stated in your repayment plan. With these calculated steps and self-discipline to manage your money and debts, you can overcome your debt problems within a considerable time period.

Debt Settlement

Debt Settlementis an aggressive approach to debt reduction, which is appropriate for debtors with a serious amount of debt. This method is commonly use by debtors who have unbearable debts and considering bankruptcy. Creditors will usually settle for less than owed when the debtor is under serious financial strain because if the debtor chooses to file bankruptcy, then the creditor gets nothing. Creditors want to get as much money back as they can.

You may do it yourself and get help from third party, debt settlement agency to negotiate with your creditors to outcome an agreed settlement amount, sometimes by reducing your debt balance as much as 50%-70%. If you plan to hire a debt settlement agency to negotiate with your creditors, you need to carefully choose a reputable debt settlement agency, understand their fee structure and you are advised to check out if there are any hidden fees involved in the settlement process.

Debt Settlement is a way to get out of debt in the shortest amount of time, and with the least amount of money without filing for bankruptcy. Although this method of debt relief will hurt your credit rating, it is definitely a better option than bankruptcy.

In Summary

Self repayment plan is good if you have manageable debts, a strong intention to get out of debt and a good self-discipline to follow the plan and make a success. Whereas, debt settlement is a fast way to get out of debts with some drawbacks to your credit rating, but it is a better option for debtors who are considering the bankruptcy option.

See you on part 2 for more debt solutions