How To Deal With Debt Stress And Anxiety: 7 Practical Steps.
You can enjoy a true sense of relief from debt forever.
If you have debts that you really struggle to pay off, do not let it sap you of your joy. You can overcome not only the stress and anxiety debt brings, but you can fully pay off and overcome your debt.
The following are available debt solutions or debt management steps to overcome worrying debt situations :
1. Don't Play The Ostrich
Because debt stress can literally drain you of all energy and will, many people give up and resort to do nothing. They are in effect playing the ostrich. They think that if they ignore the debt, put their head in the sand, the debt would somehow just go away.
This is a no option. Do not do that all. Except:
- If you are seriously in debt and are not
receiving any wage or have become unemployed, without any asset,
property, or do not wish to borrow credit in the future, doing nothing
may not bring you to further financial difficulty.
Your creditor (s)
will be very reluctant, and indeed unsuccessful in bringing legal action
against you, as they would not be able to make any collections from you
through the courts.
With numerous debt solutions today, there are more honorable debt steps to take to reduce debt stress by dealing with debt head on. They include:
2. Draw Up A Clear Personal Debt Solution Plan
Make an honest re-evaluation of your financial situation.
Add up All
your debts and write out how much you owe. Be very clear on the total
amount including the rate of interest you are paying on each one of them.
Recognize the need to halt the growing debt problem by instituting
personal debt solution plan and there by help restore your financial
health and avoid possible bankruptcy
- Personal debt solution plan will
involve drawing up a tight budget to reduce your monthly spending
- Analyze your spending habits and cut off expenses that can be avoided
like unsubscribing to cable TV
- Reduce how much cigarette you smoke per
day if you smoke,
- Stop using credit cards
- Use public transport
instead of your car if it turns out to be cheaper
- Change your telephone provider or re-routing your
calls through a cheaper provider
- Change your mobile phone tariff if you are on a contract to one with less data and only browse the internet when at home or at work when you have access to WiFi
- Taking food to work instead of buying
lunch from the restaurant, and other steps mentioned on how to avoid
3. Consider Consolidating Your Debt Into One Single Loan
Go into your bank. Book an appointment with a financial adviser. Lay bare your financial state and plans you have drawn to address these. Request to take a debt consolidation loan.
What is debt consolidation?
This is the taking
out of a lower interest rate loan to pay one or more loans with higher
interest rates. Debt consolidation is a very popular and smart way to manage
one's debt. You can get a debt consolidation loan from banks, building
societies, or even by taking out a new credit card.
presence of zero percent (0%) credit cards offering zero percent
interest on balance transfers for 6 – 18 months, it may be a wise step.
But debt consolidation may not be an option for some. Please read more
on debt consolidation to determine and decide if it is the right debt
management solution for you.
4. Can You Re-mortgage Your Property?
This may be another option if you own a property, and can not get a
debt consolidation loan.
- You can release the equity on your home and
raise cash to pay off all or part of your debt.
- This debt solution step
has the added advantage that home loans or mortgages are usually at much
lower rates compared with the traditional loans.
- You may then decide to
fix the term of your mortgage to as a guide to fluctuating interest
Please discuss this option fully with your financial adviser or a
mortgage expert to be sure of its suitability for your own specific situation.
5. Contact And Negotiate With All Your Creditors Directly
If all the above measures fail, you may just need to take this next action. It is also called debt settlement negotiation.
Debt settlement involves you calling up your
creditors or writing them and asking them to agree on a settlement plan
with you to pay only a part of your debt over a period of time, paying a
monthly or weekly amount you can afford.
If you really find
your self in a dire financial straight, this may be an option for you.
Do not feel timid about it. Go for it.
You could even get a debt
management company to do this for you. You can do it yourself though and should be the first step. Creditors tend to agree to a debt
settlement proposal because they know that it may also be a safer
option for them too, to get part of their money, without having to loose
- Have a list of all your debtors and how much you owe each
- have a clear figure of how much you would be able to pay every month when you get your pay check or income.
- If it is only £50 you can pay after feeding and rents etc, share this amongst your creditors. Apportion £5 monthly to L&D limited for example and £10 to M&S Credit Cards, etc depending on how much you are owning each
- No amount of money is too small as long as you absolutely commit to that payment amount monthly
- Also request that further interest on your debt be frozen.
Some times, and depending on the country, debt
settlement solutions may be agreed without it reflecting on your credit
report. In such case it will not affect you. In other places, this may
show up in your credit report, thus affecting your eligibility and ability to get
future credit. That should be your list concern now.
6. Individual Voluntary Arrangements (IVA)
Individual Voluntary Agreement or IVA is the next step just before
bankruptcy in the United Kingdom. It is also known as "friendly
bankruptcy". It is more or less like the individual debt settlement negotiation, except that it is done via an insolvency practitioner.
In Scotland, it is called Protected Trust Deed.
Protected Trust Deed in Scotland, is a formal proposal made by a debtor
to creditors via a licensed "insolvency practitioner" so that the debt
can be repaid according to what is affordable over a period of time,
usually 3 – 5 years. This arrangement is only possible through the use
of the so called insolvency practitioners, and they often deduct their
fee from the repayments made.
Be very careful of choosing your
insolvency practitioner, if you choose to go this route. There are many
rouge practitioners out there.
It is a better option than
bankruptcy, but it comes with a price, in that you may have little or no
access to credits while this arrangement lasts. It is by far more
dignifying than bankruptcy.
7. Declare Bankruptcy
If all fails, rather than continuing to endure sleepless nights and developing indigestion, becoming irritable and with a real risk of developing high blood pressure, declare bankruptcy.
- Bankruptcy should
be the very last resort to solving your debt problems.
- Bankruptcy is a
legally declared inability to pay what you owe.
- This frees you from been
harassed in any way by your creditors, and debts are written off.
however means that you can not have access to credits for at least 10
years, and portrays you as a bad borrower.
Filing bankruptcy comes with a
very heavy price that may shatter one’s financial and possible social
reputation. Nevertheless, it could be the only way out of a crushing
debt burden for millions. It is worth avoiding, if you can, as a debt
solution. It could affect your prospect of getting jobs and loans even
after being discharged.