Taming The Beast: What To Do When Debt Goes Out Of Control
All of the world’s finances are a gigantic balance sheet of debt and credit. While debt is an inevitable part of running a business and (let’s face it) pretty hard to avoid in household finances, there comes a point when it can become crippling. When you owe money to numerous creditors at wildly various rates of interest then these debts, though nothing to worry about individually, can turn very nasty when combined. When the monkey on your back becomes a raging, out of control leviathan, then no amount of budgeting, saving or selling your old stuff on ebay will tame the beast. This is an extremely worrying and traumatic time that can cause us to make spectacularly poor choices as well as making us emotionally distressed and irritable, perhaps even taking it out on our loved ones and creating even more heartache.
The good news is that however rampant the debt monster has become, there’s always a way to manage it.
Remortgage
Remortgaging can allow you to either make significant reductions on your monthly mortgage payments with more favorable interest rates while also releasing equity on your property that can put a serious dent in your household debts. You might not be able to free up enough capital to eliminate your debt completely, but you might be able to reduce it to something smaller and more manageable.
Sell your house
It’s an extreme solution, to be sure, but if your debt is seriously out of control then drastic times may call for drastic measures. There are various companies such as We Buy Houses who will… do just that. If you need a lot of money very quickly and don’t mind renting for a while as your finances recover then these companies will purchase your house for cash without you having to worry about realtor commissions or waiting months to find a buyer. Needless to say these companies tend to buy at below market value, although this doesn’t necessarily mean you’ll lose out. If you bought your property decades ago then you may still make a sizeable profit.
Consolidation
Debt consolidation can be an extremely useful way to stop your debts from spiralling out of control. Because managing a host of debts, each with different and disparate interest rates can be daunting and confusing as well as potentially costing more money than you necessarily need to pay back. Consolidating all of your debts into one debt and making an affordable monthly repayment is a big step towards managing your debts and giving you peace of mind. Debt consolidation solutions are fairly easy to come by with interest rates that may be more favourable than what you currently pay.
Bankruptcy
For many this is as extreme a solution as it gets, but there’s certainly no shame in filing for bankruptcy. While it may temporarily damage your access to credit (certainly for lines of credit with favorable interest rates), it can provide you with a new start and teach you to better manage your finances.
