Have You been specifically searching for articles like this? If yes, don’t feel sorry about yourself. A lot of us have been here. A recent study shows that almost 80% of Americans have debt. That’s a huge number, right! Hence, you are not alone in this.
So, what is the way forward? Well, in this article, we’ll try to understand what should be done, when someone is in a crisis like this. However, before we move on to that, let’s take a closer look to understand what Debt is.
What is Debt?
In layman terms, debt is simply money you owe to someone for something, which you have consumed already. However, all debts are not the same.
Understanding the Nature of the Debt
This is a very important part of this whole process. We usually fear something, which is uncertain and not completely known to us. On a similar note, if we fail to segment our debt, we will forever be scared to do anything about it and will end up crying on our couch with a bowl of ice-cream and a bottle of wine.
Broadly, Debt can be classified into the following categories:
These are usually debt incurred against the purchase of any asset or long-term good. For e.g. your Mortgages, Car Loan, etc. A study showed that unpaid house mortgages in 2019 rose up to $16.01 trillion.
If you can’t pay off debt like this, the asset is seized to realize your debt. Always try to steer clear of this kind of debt!
It’s the most common debt, a person accrues throughout their lifetime. The entire consumer goods industry survives on this kind of debt. Credit Card debt, small loans, etc. fall under this criterion.
If you fail to pay this, the creditors have to file a lawsuit to extract the money. On an average, around every American household has an approximate debt of $8,000!
These are usually complicated and the government has a lot of rights, too. Always make sure you stay away from them. Taxes, fines, etc. are the usual winners.
Now that you have made progress in understanding the problem, it’s high time we learn how to combat it!
What’s your Situation?
When you are on that roller coaster, you often hit the panic button at the topmost section of the ride. Debt does the same thing to us. Our inability to pay it off at the time, makes us feel that we have become bankrupt. This is not the end!
The situation can be temporary, too. Maybe, you have exhausted your money quickly and are waiting for the next pay-check. In that case, the solution is completely different.
Try Negotiating with the Creditors
Have you ever tried this before jumping to the conclusion that you can’t pay people off? If you haven’t tried, what are you waiting for? Negotiating always helps. All you need is to present your case and let them decide whether what you are proposing is feasible or not! The debt collection laws and regulations differ from state to state so make sure you are well- acquainted with the details of these laws in your preferred area. For example if you own a debt in LA, then check how the debt collection agency in Los Angeles works.
Create a Budget
Since it is a temporary situation, make sure it does not repeat itself. How will you ensure that? Blank promises do not help. Chalk out a budget for the expected income, and look for corners to cut. Find places where you cannot spend money, primarily, unnecessary things.
Be calculative, methodical and practical, or no matter how many times you read this article, it won’t help, ever!
Look for newer Part-time Jobs
There’s always one way or the other to pay off a debt. Current earnings may not suffice to pay the debt off? Have you tried looking for Part-Time work to reduce the burden? People work their hearts out, to earn money. Why should you be any different?
Look for Work from Home opportunities. Affiliate marketing and all pays off a lot, too. There’s always work if you want to find it.
Asking from Friends and Family
This could be a resort, too. A friend in need is a friend indeed. You can always go to your friends and family to bail you out for the time being, and you can always repay them back.
Take a New Loan
This is absolutely the last resort. Only do this if you have run out of options and have no one or nothing to fall back on.
However, if your situation is permanent and there is nothing you can do to repay any of your debts, consulting a lawyer and declaring bankruptcy is something, which you should do, only when all hopes are lost and doors are closed.
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