How to Settle Bad Money Lender Debt?
The solution to a lousy money lender debt is repaying it in full. Failure to do so can lead to legal actions, increased interest rates, and a negative impact on your credit score.
But things don’t always go as planned. Sometimes, you cannot repay one debt or you are deep into an unmanageable debt trap before you know it.
But all is not lost. Usually, with the proper knowledge, you can get out of a bad debt and reclaim your financial freedom status. Therefore, this post will discuss ways to take control and escape a lousy money lender debt.
1. Take Responsibility for the Problem and Stop Denial
You’ll only get out of a problem by accepting and taking responsibility. Therefore, if you’ve been screening your lender’s calls, evading attempts to get you to talk to them, or taking cash to other places than repaying loans, stop it.
Usually, denial keeps the problem rolling. Therefore, begin by perusing all of your loan documents and see where you stand. Identify how much you owe the money lenders, the interest rates, and when they are due to be repaid. The larger picture will enable you to make a plan.
Talk to Your Licensed Money Lender
Most individuals do not want to call their lenders because they do not want to be yelled at or spoken down to. But the fact of the matter is the moneylenders do require you to repay the loan.
Therefore, if you are in some dilemma, call them. Be honest where you are and inquire whether they can help you. In Singapore, all licensed moneylenders would be more than happy to reschedule your loan, or offer a deferment of payments until you can resume repayment. However, to get this benefit, you must offer an honest explanation in advance when the circumstances do not allow you to repay your debt as agreed.
Create a Reasonable Budget
Once you have spoken with your lender, you should begin to keep your budget in mind. Begin by listing everything you spend and use, from the rent and the bills to the groceries.
Take a good look and see if you can save some bucks somewhere down the line. For instance, you could eat out less often, eliminate unwanted club memberships, or purchase cheaper substitutes for items you buy continuously. You can also use budgeting apps or spreadsheets to track your expenses and identify areas where you can cut back.
Then, when you reduce spending, you can use the extra savings from daily expenditures to repay your debt and clear it sooner.
Money Lender Debt Prioritization
Not all debts are equal. For instance, some debtors charge more in interest, and some charge more penalties for late payment. Therefore, pay off the highest interest charges first because they will shoot up overnight to huge amounts.
Notably, if you have more than one loan, consolidating them into a single loan with lower interest would be a good idea. This involves taking out a new loan to pay off your debts, leaving you with a single, more manageable monthly payment. However, be cautious and ensure the new loan has a lower interest rate and favorable terms.
Tap on Alternative Sources of Income
Sometimes, cutting costs is not enough. If your present income is not large enough to cover debts, attempt to find a means of generating secondary income.
Side hustles such as freelancing, tutoring, and part-time work are other means of generating secondary income in Singapore. Even attempting entrepreneurship can play a significant role in enabling you clear your debt within an earlier period.
Do Not Take More Money Lender Loans
You may be persuaded to get another loan to repay your current one, but that is a poor choice. You are not solving the problem but merely digging a hole.
Pay your debt first before you sign anything new. If you cannot resist having it, you can speak with a finance counselor to help you make a sensible decision and draw a proper budget.
Seek Professional Guidance, If Necessary
If your debt is spiraling out of control despite your best efforts, do not hesitate to ask for help. In Singapore, credit counseling agencies provide free debt advisory advice and negotiate with your creditors on your behalf.
Therefore, do not be afraid to ask for help. It is not a weakness but the first step towards mastering your finances. This can bring a sense of relief, knowing that you’re not alone in this struggle.
Final Thoughts
Getting out of bad money lender debt is not simple, but it can be done. Therefore, when repaying the debts, reward yourself with something nice for even the small wins, like paying half your loan or surviving a month of budgeting. Importantly, never lose hope, and keep reminding yourself that you are closer to being debt-free as long as you’re on the right track.
Lastly, contact and work closely with your licensed money lender to evaluate your situation and formulate an effective debt repayment plan. This will relieve you from strain as you meet your monthly debt repayment obligation. Mainly, seek help when you feel stuck and let the money lender assist navigate the difficulties.