Debts
When You Have Too Much Debt
If you can’t pay any more on your debts, or you can only pay less than the minimum payments required on your debts, or most of your income are going on repaying debts and/or you can only pay the minimum payment on a credit card debt, then you have too much debt.
What you can do about this will depend on what your situation is exactly. Some of the options you may have to deal with having too much debt, may include working with your creditors on your debts, creating more income for yourself, and making use of some free and professional help/advice on debts.
1. If Most Of Your Income Is Going On Repaying Debts Or You Can Only Pay Less Than The Minimum Payment Required On Your Debts
You may be able to do some of the following.
You may be able to work out some affordable repayment plan with your creditors on your credit card debts, medical bills, auto debts or any other type of debt you may have.
Your mortgage creditor/lender may suspend or reduce your repayments for a few months, and together with your input come up with a new repayment plan for you, after that period.
With an auto or mortgage debt, your creditor/lender may also choose to do a loan modification for you, by changing your loan type, reducing your interest rate, extending your loan term etc, to make your loan repayments much more affordable.
With student loans, you may be able to postpone your loan repayments for some time, or temporarily make lower repayments on your loan, or increase the length of time for making your repayments. You may also be able to reduce your monthly repayments by consolidating all your student loans into one single loan repayment.
If your student loans are federal loans, you may be able to include them under the Income-Based Repayment Plan (IBR), which may allow you to make some more affordable repayments, based on the size of your family, state and your income. And if you are working in the public service sector too, you may qualify for student loan forgiveness, with federal loans.
2. If You Can’t Pay Any More On Your Debts
Once you can’t pay any more on your debt, your options may be limited, but you may still be able to work with some of your creditors, to make use of some of the following options too.
If you have mortgage debts, some creditors may provide you with some time to sell your home, and take whatever price you may get with it, or allow another client who is qualified for a mortgage, to take over your mortgage. Your creditor may also choose to take back the property, and then cancel or forgive whatever balance you may still owe on your mortgage.
For student loans, you may be able to postpone your repayments, which may provide you with some time to create some income for yourself, to pay down your debts. If you are on federal loans, you may be able to get a student loan forgiveness on your loan too, if you work in the public sector, to be debt free, if you cannot afford to pay on your debts any more.
For your auto debts, once you can’t pay any more, you may on your own choose to give back the vehicle to your creditor, or choose to sell your car to pay your debt.
Working with your creditors may reduce the impact of your debts on your credit score and could make your situation less difficult for you. If you wish to work with your creditors on your debts however, you will need to get in touch with them as early as possible, doing so may help you to get some more favorable options from them.
You will need to know how much you actually owe and how much you can really afford to pay on all your debts together in total, so you can be in a better position for negotiations, you can know how much you may be able to afford on your debts by reviewing your budget, incomes and expenses.
If you can only pay less than the minimum payments on your debts, you can compare several personal debt plans using ZilchWorks, a personal debt management software, to see how long it may take you to pay off your debt with different repayment amounts, and how much you can save on interest charges, and how fast you can pay your debts off with different repayment amounts. This may come in handy when you are negotiating with your creditors on how much you can afford to pay on your debts. You may learn more about personal debt plans here.
You may need to prove to your creditors that you are actually going through some hardships for real, to make your negotiations work.
You may want to review whatever your options are with a certified credit counselor. You may also need the help and advice of credit counselors too, if your negotiations do not work out with your creditors. You can get some free help/advice from certified credit counselors through some government bureaus/agencies and/or reputable debt relief companies for free.
Before you get in touch with your creditors and/or credit counselors, you will need to review your budget, bills and/or loan documents.
3. If You Can Only Pay The Minimum Payment On A Credit Card Debt
Making only the minimum payment on your credit card debt, will not only make you pay more on interest charges over time, but will also extend how long it may take you to pay off your debt. While you are making your minimum payments, you may choose to create more income for yourself, to pay your debt off faster, and provide yourself with some savings too on interest charges.
You can create more income for yourself by working more than one job and/or by adding more income streams to your primary source of income. You may choose to generate more income for yourself through some of the list of income streams here, or you may choose to try some online income streams instead, more information on that here.
