Debt. It’s something that nearly everyone will experience at some point in their lives. What happens, though, when your debt begins to take control of your life? Is there a range of possibilities available? It’s just a matter of deciding which of several easy tactics will work best for you in order to bring your debt under control and out of a seemingly insurmountable position.
Though you have many credit cards and feel like you’re not making any progress toward paying them off, even when you’re making payments that are greater than the minimum, you may be suffering from debt overload. People tend to become preoccupied with making sure they pay off all of their credit cards at the same rate, regardless of the amount owed or the interest rate. The solution is to arrange your debt according to its importance.
Choose which credit card you want to pay off first and concentrate your efforts on that one. You should continue to make the bare minimum payments on your other credit cards since you do not want to harm your credit rating by having late or overdue payments listed on your credit history. For example, if you have three credit cards and are paying a sum in excess of the minimum payment on all of them, take the extra amount you are paying on the other two and use it to pay down the debt on the card you wish to pay off first.
The one with the greatest interest rate should be the one to choose. Following its repayment, you can turn your attention to the next card, which will include the amount you had been paying on the previously paid-off card. Doing so will feel tedious at first, but as you pay off each obligation, you will gain a sense of satisfaction and success.
Alternatively, you might arrange a meeting with your bank or credit card provider to examine lower interest rate possibilities. If your credit rating is still in good standing, most banks will allow you to switch between different credit cards, such as from a cashback card to a lower interest rate card. Others will work to get your interest rate down. Keep in mind that if you don’t inquire, the answer is assumed to be ‘no’ by default.
You could also consider a debt consolidation loan with the help of a knowledgeable Mortgage Professional. A well-executed mortgage can assist you in converting your bad debts into good debts and getting them out of the way by taking advantage of refinancing some of the equity in your home to pay down your credit card debt and get your finances back on track.
The only other choice is to file for bankruptcy or complete a consumer proposal as a last resort. A consumer proposal will allow you to keep more of your assets than a bankruptcy, but both will have the same effect on your credit rating. This means that until seven years have passed from the completion of the consumer proposal or discharge of bankruptcy, you will be unable to obtain credit from anybody other than a high-risk, high-interest lender.
There are a variety of options available when dealing with debt. The most important thing is to realize when your debt is becoming an issue and to take action to resolve it. Because the longer you wait to deal with the problem, you will have fewer options at your disposal, so act quickly! If in doubt, consult with a professional. A meeting will cost you nothing but your time, and it may be able to provide you with some direction as to which choice is the greatest fit for your circumstances.
It is possible that your solution will be a combination of all of the tactics listed above. An advisor can help you assess whether a priority payment approach, debt restructure, debt consolidation or a combination of the three is the best solution for your financial situation. Most importantly, you must take action before you reach a situation when bankruptcy is the only alternative remaining to you.
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