When you are trapped under a mountain of debt, it can be so difficult to get out of it. A lot of people find themselves in a position where they can only afford to pay the minimum payments each month. It takes years to clear the debt and you will pay a huge amount of money in interest. But what happens if you can’t even afford the minimum payments? It might be that you have built up too many debts to handle or your financial situation has changed and you are no longer earning enough to cover the monthly payments. Whatever the reason, it’s a scary situation to find yourself in, especially when you have creditors ringing you up and threatening to send the sheriff to your door.
It may feel like there’s no way out, but that isn’t the case. Even if it doesn’t feel like it, you do still have options and you can turn things around. Here’s what you should do if you can’t afford to pay your debts.
Declare Bankruptcy
If you really cannot afford to pay back your debts and there is nothing else you can do, you will need to declare bankruptcy. You will have to pay back what you can and the rest of the debts will be written off. If you think that this is the best course of action, you need to get in touch with a bankruptcy law office and they will help you through the process. However, it’s important that you don’t take this decision lightly because it will leave a mark on your financial record and can make things very difficult in the future. Before you decide to declare bankruptcy, you should look into some of your other options.
Payment Plans
People always assume that creditors are not flexible and if you owe them money that you can’t pay, they’ll send the bailiffs round. But that isn’t the case – because they would rather have their money than repossess your belongings. That means that they are often willing to negotiate a payment plan with you. If you assess your finances and work out how much you can afford to pay, you can be upfront with them. In some cases, they will not be flexible, but more often than not, they will work with you to help you pay back the debt.
Debt Consolidation Loans
If you have a lot of different debts, it can be difficult to keep up with the payments and the interest on all of them will add up. But if you can get a debt consolidation loan, it can make things easier. All of the separate debts will be paid off, which takes the pressure off, and then you can pay back that loan in easy to manage payments. Consolidating all of your debts will reduce the amount of interest that you owe, and make the monthly payments easier to handle so you can start planning your finances better.
If you cannot afford to pay your debts, don’t just bury your head in the sand. You always have options and there is always a way out of debt.
