Around the world, it's normal for people notably adults to experience debts. Financial difficulties come and go and when faced with these problems, people often turn to lenders to borrow money. Unfortunately, not all borrowers can commit to their obligations due to certain unavoidable circumstances the reason why they continue to be in debt.
Mismanaged finances, misuse of credit cards and loss of jobs are just some of the reasons that can lead people to miss their loan payments or worse, not settle them at all. In the U.S. alone, the average American has a credit card debt of $4,717 and a research by Pew Charitable Trusts noted that people with higher income and more assets tend to have more debt. The study found that eight in 10 Americans are in debt mostly due to a mortgage.
But there are steps you can take to avoid filing for bankruptcy. A foremost requirement is to have the right attitude and commit to settling your financial obligations moving forward.
Assess Your Financial Status
When you find yourself juggling debts, it's time you sit down and assess your financial situation. If you're married, discuss this with your spouse so both of you have knowledge about everything. The first step you can take is to review your credit report which will specify the amount you owe and to whom you owe them.
Summarize your debts and list down the total amount due taking into account your overdue, what's due later and your minimum payment requirements. While you are still able to pay your dues, make sure that you also pay your debts after your mortgage and food.
If you're facing multiple debts, you need to prioritize which ones to pay first. It would be a good idea to come up with a plan for paying the most important bills so you can avoid late charges. Make it a point as well to pay off the bills with the highest interest rates first while you can still afford it.
Filing for bankruptcy is never a good option and a quick solution. It has its disadvantages such as loss of property and the continuous payment of debts and bill. Take note that you will not be allowed to retain properties you are paying for and you will still continue paying any secured loans.
Sell Unnecessary Personal Belongings
For people who have accumulated many personal belongings through the years, holding a garage sale can be a huge help. This will enable you to earn an income from things you no longer use including the new items you may have bought but have not used at all. The cash you will gain can help you pay off bills and make loan payments.
Consult with Your Creditors
If you're having a hard time paying your loans and important bills on time, you may consult your creditor. Be honest about your situation so you will be accommodated well and be open to a payment plan that would your suit your situation. Possible solutions they may give are temporary reduction in the amount you're paying, delaying payments or waiving late charges.
Create a Budget
It is very important to create a budget and stick to it. Make this a priority as well to enable you and your family to live within your means.
Getting into debt is a life lesson that many people have not learned to deal with. But if you know the signs, you need to take action right away to save yourself and your family from further financial trouble.