Debt Management
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Isn't it funny how the financial cycle of the world runs? One month you are there smiling with your lender after getting approved for a loan, and the next, the same lender turns up the heat on you - by sending bailiffs like the Marston group or Moorcroft debt collector after you - when you're unable to repay them. Sounds so ironic, right? Well, that's the cycle of financial escapades some people have had to endure all their lives.

But how come people find themselves in these situations? Some may wonder. Well, the answer isn't farfetched. Many people are simply bad with debt handling. They take loans to fund the cheap funeral plans they find online, tap into their credit wells to buy a life insurance policy, and use equity lines to sponsor their projects without really having a clear picture of how they are going to manage and handle the repayments. Debt handling is not for the faint-hearted, and without equipping yourself with the right tips, you may end up living with a singular debt for years. But for that not to happen, we've compiled this guide to help you handle your debt better.,

Know what your debts are and who you owe

If you want to handle your debts properly, the first step is to understand who and what you owe. Without a comprehensive understanding of your level of debt, it might be difficult for you to keep up with the actual payments. As a rule of thumb, always create a list of all that you owe, who you owe, and what monthly payment is expected of you. Although this may sound pretty straightforward, it isn't. In fact, many people don't even take the time to do any of it. Having all your debts clearly stated and outlined - whether in written or typed format - will help you stay on top of your debt situation. That way, you wouldn't have a reason to skip a monthly payment or forget to make a payment as at when due. Furthermore, you wouldn't be tackling debt A when debt B is the most pressing, and above all, you will finally be able to stay on top of your debt situation.

Make at least the minimum payments

Irrespective of how huge or small your debts are, your creditors wouldn't need to start chasing after you with bailiffs if you're fulfilling your end of the bargain. Even if you cannot afford to tackle your debts all at once, at least endeavor to meet the minimum requirement of payment. Although sticking with the minimum payment wouldn't help you clear off your debt quickly, it, however, keeps your debt from accumulating and protects your credit score from crumbling. Many borrowers who end up wallowing in debt start by missing out on their minimum payments. But what many fail to grasp is that the moment you start skipping payments, it becomes really hard for you to catch up and eventually, your account will move into the default mode.

Make a decision on which debt you want to pay off first

Now that we've established the importance of making the minimum payments on all your debts let's now go a step higher. Some debts are indeed more pressing than others. Credit card debts, for instance, are usually characterized by higher interest rates, which means that they are more expensive and burdensome to repay than other kinds of debts. So if you want to get them off your neck quickly, you will need to pay extra attention to them. To do this, you're going to have to make more than the minimum payments on all your credit card debts, knowing fully well that the higher your payments, the quicker it is for you to get out of debt.

Create an emergency fund

When you don't save enough, or have the luxury of multiple income streams, it is only natural to think that you may have to resort to debt every time you have an emergency. But when you're lucky enough to have an emergency fund to fall back on, there will be a limit to how much debt you would need to incur. In this light, you're advised to strive to create, at least, a small emergency fund. Regardless of how low your income is and how high your expenses are, always try to follow this rule of thumb. While this strategy may not directly help you pay off debts, it does protect you from the possibility of falling into debt, which is the best method of handling debts - that is, not creating more debts.

Never underestimate the possibility of negotiation

Regardless of whether you owe debts to individuals or corporate bodies, always bear in mind that negotiation is allowed. And sometimes, it may be the only viable option available to you. With schemes like the IVA Scotland and establishments like the IVA companies available and willing to give you free IVA advice anytime, you reach out to them, negotiating with lenders is now easier than ever. Once you're able to prove that you can no longer handle the financial obligations that come with your debt payments, these schemes will help you strike an agreement with your creditor, while also writing off any remaining balance you may have at the end of the day.