Huge debt load even after your best efforts – What can you do?
Problem:
I have been making regular payments on all my bills for the past 5 years. I pay all my store card and credit card bills within the scheduled date. I have not missed a single payment during the past 5 years. However, in spite of my outmost efforts, my outstanding balance is still high. It is primarily because of the additional fees and interests accumulated from previously late payments. My outstanding balance on credit cards and the store cards is $59,752. I am feeling depressed. Is there any way to reduce the outstanding balance? Please help. Thanks.
Solution:
It is quite natural to feel depressed when your outstanding balance does not get reduced even after paying your bills on time. Honestly speaking, you’re in this situation because of borrowing money beyond your financial means. Your creditors are charging high interest rates because of a couple of late payments.
Past is past. Your situation will not improve by being depressed. You have to carry on with your life without committing the same mistakes you have done a few years back. Your financial situation is bad, but not completely irrecoverable. Millions of people are facing the same situation in the country, and they are able to get out of it by finding the right debt solution.
My first debt advice will be to conduct a thorough appraisal of your budget and find out the amount you can pay to your creditors every month. If you can make high monthly payments to your creditors without any problem, then you can get out of the situation sooner. You can try to increase the monthly payments with each year. This may help you reduce your outstanding balance slowly. You’ll be able to save some time and extra charges if you’re successful in convincing the creditors to slash interest rates.
My second debt advice will be to seek debt counseling from a credit counselor. Fix an appointment with a credit counselor who has helped debtors in the past. The counselor will evaluate your present budget after sitting with you. He will suggest some financial strategies to you. Implement those strategies and find out if they are helpful. If your payoff amount is not reduced even after utilizing those strategies, then the counselor may try to lower the interest rates for a fee.
You may have to pay a fee for the services offered by the credit counselor, but you’ll be able to save finance charges in the long run. The credit counselor can assist you in making your debt repayment process faster.
If your financial situation does not get better even after getting help from the credit counselor, then you may go for debt settlement. In a settlement program, you’ll have to pay only a fraction of your outstanding balance. However, there is a downside of debt settlement too. Your credit score may drop by several points while settling your debts. Your score can drop between 75 to 125 points depending upon your current credit score.
My final debt advice will be to take advantage of the aforementioned options, and pay back your creditors. Try to establish a good credit history as this will help you make a favorable impression upon your future lenders. Besides, when your payoff amount gets lower, you’ll start feeling good and happy once again.
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