Getting into debt is easy, but settling your debt is another thing. Settlement of debts may not be as easy as it looks as there are various factors to be considered before one can actually pick the method that works best for you. Here are a few tips that would be hopefully be useful in assisting you in settling your debts:-
(a) Work within your budget
It may appear obvious but many people do not know how to settle their debts within their budgets. They opt for “minimum payments” on their credit card bills when they can actually pay much more than that. It is better to settle all your bills in one go as opposed to dragging them out over installment payments (this is of course if it is within your budget to do so). You will save more money in the long run. However, if you are unable to settle all your bills at one time due to financial constraints, then work out a budget that is both flexible and predetermined, so that you do not get “tempted” to forestall the settlement of your debts in favour of spending more money!
(b) Litigation
When things go really bad, you may end up in court for your debts. This is where a creditor decides to take legal action for recovery of the debt. The consequences are severe – most of the time you will not really have much of a defence since you are contractually required to pay your debts as and when they fall due. In the event of litigation, try seeing if you can arrange for an out of court settlement with your creditors. Most creditors will be amenable to installment payments or even a discount on the overall sum – after all, sum money is better than nothing. As such, don’t be afraid to offer a settlement – however, always preface such offers with “WITHOUT PREJUDICE” labels, as otherwise they may use it against you as an admission of the debt.
(c) Ask for help
It’s never undignified to ask for help especially when you need it. See if you have friends or family members who can assist with friendly loans (with low interest or even interest free). It’s better to owe them than to owe a third party financial institution who could care less about your personal situation. Of course, it is a case of “borrowing from Paul to pay Peter” but if Paul is your friend, you’re in a better situation. You should naturally of course be responsible and settle your debts, even if they are to your friends.