Financial difficulty can leave you feeling overwhelmed, with no clear path forward. But there are options that can bring you debt relief, and ease your situation.
Discover more about debt relief, how to organise your debt and make debt relief work for you.
Why You Might Need Debt Relief
Many people find themselves unable to manage their debts at some stage, often because the bills pile up, and the multiple credit cards, personal loans and the mortgage become too complex to track and service on time.
Debt relief is a plan to help an individual pay off their debts, and maintain good financial health. The key is getting yourself into a better financial situation. If you have creditors chasing overdue payments, if you are struggling to keep up with the many repayments required of you each month, and if you feel like you can’t see a way forward, it may be time to seek debt relief.
Debt Relief Options
In order to understand your financial situation and choose the best debt help, it’s good to write a list of all of your debts, including how much you owe, what the interest rate is for the account, and what the debt is for. You’ll then be able to prioritise your debts and work towards getting out of debt.
There are a number of steps you can take to turn around your debt:
Budgeting: This all about spending within your means.
- Taking simple steps to reduce your spending, will leave you with more money to pay your existing debt faster.
- Pay your bills when you get paid, rather than waiting until they are due – you won’t be able to spend that money elsewhere if you use it to make a debt payment first.
- Switch to cash for your daily spending, and leave the cards at home: by only having a certain amount of money with you, you won’t be tempted (or able!) to make impulse purchases.
Earning more money: Consider picking up a second job on the weekends or in the evenings.
Paying off one debt at a time: Remember that list you wrote? Firstly, highlight the secured loans. These are going to be your mortgage, if you have one, or a car loan for example. It’s important to prioritise making your repayments on these debts, on time. If you continue to make defaults on secured loans, the creditor may repossess the asset in order to recoup their money. After you set aside those repayments, focus on paying the debt with the highest interest rate, first. This debt is costing you the most money, so it makes sense to repay the amount as quickly as possible, then close the account. You can then move on to the debt with the next highest interest rate.
Who to Talk to About Debt Relief
You’ve done everything you can to reverse your debt, but you still need help. It’s helpful to seek financial advice for further debt relief options. You can talk to your bank, or seek assistance from a debt consolidation administrator, to discuss loan products such as refinancing, consolidation, credit card balance transfer, Debt Agreement, or even bankruptcy if necessary. The goal is to bring your debt into order and help you get back in control.
Once you’ve spoken to one or more providers, you will be able to choose the best option for your financial situation. You’ll be required to provide personal information and submit an application. When you choose a debt solution, you will be making a new contract which will require you to confirm that you are able to make the specified payments for the term of the contract and meet other obligations as detailed in the terms and conditions. It’s important that before you apply, you are aware of what is required from you, to ensure you don’t end up back at square one.