4 Ways to Reduce Your Debt Payments October 27, 2020

4 Ways to Reduce Your Debt Payments

Debt levels for households are at all-time highs. Total consumer debt hit $4.19 trillion in the fourth quarter of 2019, while unpaid revolving debt, mostly credit card and personal loan debt, exceeded $1.09 trillion.

One of the keys to financial sustainability is correctly controlling the amount of your debt. If you are a multi-million – dollar professionals, the key to financial independence is good debt management. If you struggle to preserve or decrease your debt, here are tips you can follow.

Always Negotiate
To draw up a list of all your creditors and how much you owe, get a copy of your most recent credit report and billing statements. Then, find out how much each of you will pay. Call each creditor and let them know that you are prepared to pay off the debt. But when you do, make sure that a payment that fits within your budget is already determined by you. 

A hardship package that will lower your fees or interest rate for a period of time could be provided by your credit card issuer. 

Do not struggle or protest if the customer service representative says no; simply ask a supervisor to speak and make your request again. Before making a payment, be sure to get the agreement in writing, preferably on corporate letterhead.

Also, Read: A Successful Guide How To Market a Franchise

Consolidate
You will be offered a lower monthly payment by combining the debt and paying it off with a debt reduction loan. On your current balances, average the interest rates and search for a loan that has a lower interest rate than your current average. 

You will use it to pay off your current loans as you apply for the loan, then concentrate on making a single monthly payment on the loan. Debt consolidation loans are not the only debt consolidation option. Consider a private loan, a home equity loan, or a cash-out refinance as well. 

By extending the repayment period, be careful about having a loan that merely reduces your payments. Over time, you’ll probably end up paying more interest than you otherwise would. Also, think hard about placing your home on a loan for leverage. You could lose your house if you can’t afford your payments. 

Use this calculator to get an estimate of your monthly payments will be lower than what you pay if you’re considering a personal loan.

Transfer Balances
You will also get a balance transfer credit card with a lower interest rate than the other credit cards if you have a decent credit score. You may sometimes also get an incredibly low introductory interest rate and use the introductory period to make interest-free loan payments. 

To find out how much you’ll save by converting your balances, you can use a balance transfer calculator. Please bear in mind that a transfer fee is usually paid using this technique. If this is the case, the fee will reduce the amount of interest savings expected by you.

File Bankruptcy
Also with reduced installments, there are periods when the debt you owe is simply too much to pay. In this scenario, you might consider filing for bankruptcy. By requiring an income-debt comparison and consumer credit counseling before you can file for bankruptcy, bankruptcy law prohibits people from manipulating bankruptcy. 

Bankruptcy in Chapter 7 will allow you to fully wipe out your debts, while bankruptcy in Chapter 13 will provide a payment schedule.

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