You Have Debts? Check How You Can Overcome Them! – Debt Consolidation

The rush of life, the availability of goods and services and the requirements of the modern world make it easy to stray from a safe road and fall into a financial hole from which it is sometimes difficult to get out. In extreme cases, consumer bankruptcy is announced. The data about the growing scale of this phenomenon are: since 2015, courts have issued more than twenty times more decisions on consumer bankruptcy than in previous years (data published by the Central Economic Information Research Center)! has more notes

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However, the announcement of consumer bankruptcy is not a simple solution. What is more, it involves additional costs (including a contribution to the remuneration for the trustee) and an estate of the indebted person. This is not always beneficial to the debtor. Is there another way to get out of the financial hole?

By far the best (and often the only) option is to pay all debts. Sometimes it seems unrealistic – there are a lot of debts, interest is increasing, the creditors do not stop calling. All it takes is a bit of self-denial, internal discipline and a good plan. Below, we suggest how to go about it.

1. Do not deepen your debt 

1. Do not deepen your debt 

In order to get out of the financial collapse, one should first stick to the basic principle: no new debts. It is impossible to get out of debt when we still add more to the debt pool.

2. Set the total amount due

2. Set the total amount due

It may be hard to believe, but very often we do not know exactly how much our debt is. We do not remember when and with whom we signed loan or loan agreements, especially if we often used this form of financial support. We have no idea whether the liabilities were included with the insurance contract, what is the amount of interest, etc. To effectively get rid of debts, collect all current agreements on loans and loans, arrange them in chronological order (from the earliest taken to the latter) and determine the exact amount of the debt.

Record the most important data from each of the collected documents:
– the name of the creditor, the number of the contract and the date of its signature
– type of contract (eg mortgage, cash loan)
– the total amount of the loan / loan
– installment amount and payment dates (repayment schedule)
– information whether the obligation is covered by insurance (if yes, write down the amount)
– what is the delay in repayment (if you are losing it)

After writing out the data from all documents, calculate the total monthly installments, then compare it to the amount of income you receive.

3. Think about a consolidation loan

3. Think about a consolidation loan

If you can not deal with the repayment of individual loans or loans, consider taking a consolidation loan. What will you gain by deciding on this form of credit?

– you pay one installment per month – lower than the sum of installments from individual liabilities
– you pay interest accrued only on one consolidated loan
– if individual liabilities are insured, you can get a refund of the insurance you have not used. The money obtained in this way can be used to repay the consolidation loan
– it’s easier to pay off your debt because you can not miss a small loan. One loan is one repayment, instead of several or several dozen others

4. Make negotiations with your creditors 

4. Make negotiations with your creditors 

If for some reason you can not take out a consolidation loan (eg you do not have sufficient creditworthiness), and at the same time you are unable to pay your loans or if your debts were taken over by a bailiff, try to negotiate with your creditors.

The situation is particularly urgent if your debt goes to the bailiff. It must be remembered that court costs are high, and the bailiff does not work for free. It often happens that the money taken from the account by the bailiff is enough to cover the enforcement costs, and therefore does not reduce our proper debt at all. The situation becomes stalemate, because despite the decrease in revenues by the amount taken by the bailiff, the entire debt is in place. At that moment, you should apply to the creditor as soon as possible with a proposal to reach a settlement.

How to go about it?

Find the creditor’s name and correspondence details in the credit documentation prepared earlier. Prepare an application for a settlement regarding the restructuring of your liability. Depending on the situation, you can apply for:

– suspension of repayment for a specified period of time, e.g. for several months
– reducing the amount of installments (keep in mind that this will extend the total time needed to pay off all your debt)
– redemption of part of the debt (it is most often used when the bailiff’s execution does not bring the expected results and only small amounts are transferred to the bank)
– insurance refund (will reduce the amount of debt, but in its place the bank often demands another form of security, eg a guarantor)

Write a justification in which you will present all the arguments that may affect the positive consideration of your application. Refer to specific situations and support them with appropriate evidence, eg if you have lost your job, attach a Labor Office certificate to your application if you have reduced your salary, attach a current income certificate, if you have a sick child, add a hospital treatment card, medicine bills etc. if the debt is delayed by the death of a loved one, attach a copy of the death certificate, if a fortuitous accident, attach a relevant letter from the insurer. Prepare the application prepared in this way and send it to the addressee by registered mail.

5. Act multi-way

5. Act multi-way

Do not wait for the creditor’s decision to restructure your debt. Work!

At the beginning, find a guarantor – a trustworthy person who has the creditworthiness and if necessary will be able to guarantee your liability (eg if you do not have sufficient creditworthiness to take out a consolidation loan). For your safety, you can sign a civil law contract under which you commit to repay the loan, so that the person who guarantees the loan does not have to do it for you.

Find additional sources of income – sometimes even working on a full-time basis, we can make time for an additional order. Look for tasks that you are able to do, systematically browse job advertisements posted on the internet – you will surely find something for yourself! In some situations, it is also a good idea to work abroad, especially if we already have someone there who will help us to take our first steps in exile.

Create your own home budget – note profits and expenses. Check what you spend the most money on and see if you can not limit some of the costs. An efficient home budget management will help you get out of debt and protect you from falling into another financial trouble.

Save money – do not spend on things that are not really necessary. Remember that every small amount brings you closer to getting out of debt and achieving financial stability.

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