In today's plastic savvy times, it is just so easy to fall into
debt. The great thing about credit cards is that you don't need
to pay anything upfront making it so much easy for all of us to
shop for our favourite products. But the flip side of it is that
most people do not realise that the credit card companies levy
exorbitant interests if you do not pay the bills on time. The
result: you are thrust neck deep into debt.
So what options do you have? Declaring bankruptcy or just hiding
yourself under the bed? Hardly a solution! The first thing to do
is to accept and admit that you are in debt. There is no need to
be ashamed of your financial crisis. With UK's current deficit
touching the £1 trillion mark, there are a lot of UK residents
who are facing similar situations.
The next thing that is likely to pop up in your mind is whether
you should hide your debt status from your lenders or disclose
it. Your first instinct is going to tell you to let thing be the
way they are. But that is not a correct approach. Most companies
will be willing to work out an agreement with you as long as you
keep them informed about your inability to keep up with the
payments. So go ahead and tell them about your financial crisis.
That's done; now you must draw out a list of your debts and
outstanding payments. Compile a financial statement of sorts and
find out to what extent your outgoings are exceeding your
income. Leaving aside the bare necessities like gas, food, water
and electricity, can you cut down on any of your other expenses?
Check if you are missing out on any benefits that you may be
If status still seems abysmal, what you can do is draw out a debt
consolidation loan. This loan basically wraps up all your
debts into a single loan. So, now you don't have to worry about
several monthly payments. A single monthly payment will do for
all other payments.
What's great about debt consolidation loans is that they come
at an interest rate that is a lot lower than the cumulated
interests of your credit card bills and other outstanding
payments. Add to this, you no longer have to deal with the
harrowing calls of your creditors. Your consolidation loan
lender will take care of all that. He will negotiate with your
creditors and you have to just worry about paying this single
loan and nothing else.
consolidation loan will not only help you get out of your
debt swamp, but also help you in improving your credit score.
This is a far better option than declaring bankruptcy wherein
your credit score goes straight for a nosedive. However, you
must remember to pay your debt consolidation loan installments
on time, lest you end up facing a legal action.
A Consolidation Loan, Friend or Foe?
If you have multiple high interest credit cards and other financial obligations, debt consolidation or some other debt management strategy may be in order. As you are by now aware, with a debt picture that includes so many high interest obligations,...read more