People seem to love throwing superlatives around when they represent something of an exaggeration. But when it comes to debt, overwhelming can be precisely the right word. If you have so many credit card bills, overdraft statements and the like flooding in through the door, you can feel helpless, paralyzed and, in other words, overwhelmed. That’ when debt becomes overwhelming.
It’s not at all uncommon to go into what is almost a state of denial and shut down. Those with overwhelming debt often dread or even ignore the mail. They refuse to answer phone calls and essentially, disappear into their shells. They hope the problem and the whole world will just go away and leave them alone.
Put that way, it is easy to see that debt problems don’t just damage your financial health. They impact your mental and physical health. And even your ability to sleep, your relationships, everything.
Asking for help is the first step to a solution
The crazy thing is that there is no reason on earth to go through this pain and suffering. If you can’t afford to pay your debts, nobody is going to hang you upside down to try and shake out some spare quarters. There are solutions available that will help you get rid of the debt problem forever. You can then get on with living your life.
Like any financial topic, however, debt management is a specialist area and needs specialist advice. If you are contemplating a retirement fund, an investment portfolio or a new mortgage deal, you will speak to an appropriate financial advisor. When it comes to dealing with debt, you need to do exactly the same thing.
Striking a deal with your creditors
One option that a debt management consultant will present is a repayment plan. You’ll you pay what you can afford to pay and no more. This will mean the creditors will be required to show some flexibility in terms of what they get and when they get it. In some cases, they might even be asked to write off a proportion of the debt.
Companies that specialize in negotiating these sorts of agreements deal with the banks and lending institutions every day and will be in the best position to cut a deal. The creditor will usually agree, on the basis that something is better than nothing, and if you are paying as much as you are able, it will be fruitless for them to waste time and money of their own trying to squeeze you for more.
What if you just can’t pay?
Even if your financial situation is so dire that you are completely unable to pay, there is always a solution. Bankruptcy is the obvious one, but in the UK, there is an innovative solution called a debt relief order. This is applicable for those with significant debts and no valuable assets. The way it works is that your debts are frozen for a 12 month period. No interest, no letters, no phone calls. If your financial situation has not changed after the 12 months have elapsed, the debt is written off.
Of course, this is not for everyone, but for those who do not own houses, cars, etc, it is a great way of drawing a line and starting afresh.