The debt spiral is a common phrase. At some point, the manageable debt that many of us live happily (or at least contently) with can cross a line and get out of control. Many people keep borrowing to keep up with other payments, leading to an amount of debt that truly becomes unmanageable.
When it feels like there is no way out, it seems hopeless. But there are strategies for those too deep in debt that can help them claw their way to an escape. It’s not always easy or cheap, but it’s important to know the strategies available to you.
Get on the phone
One of the biggest issues with getting too far into debt is that many people try to ignore the problem. By putting off the important task of dealing with it, you might think you buy yourself more time. But the truth is that creditors who get no response are more likely to call in collections agencies.
These collections officers don’t negotiate and will take whatever legal means necessary to recoup the money borrowed. By taking the initiative and negotiating with your creditors as soon as you know you’re not able to keep up with payments, you have a greater chance of being able to rearrange them to make them more manageable.
Put it all in one place
Sometimes, negotiation isn’t possible. Some creditors don’t want to make things more affordable for you, unfortunately. When that is the case, could you make a situation better by paying the debt back to someone else? Payday loans are known as some of the most predatory and high-interest around and avoiding them when possible is a good idea.
By finding payday loan consolidation, you can often get a much more relaxed payment schedule as well as freezing or lower interest. In many cases, you may need to use an asset like a car or house as collateral, but when you don’t have good credit, that is often the only solution available anyway.
The last-ditch effort
Filing for bankruptcy isn’t something that should be taken lightly and should never be the first option. It clears all debt from the table (except student debt), but it also means losing all the resources to your name and is only applicable when the amount of debt accrued is larger than your net worth. You will also suffer a very big hit to your credit score.
However, for those who have exhausted all other options, filing can sometimes be an effective way of putting the stress of the debt behind you for good. It means starting from step number one with an almost-clean slate. If you’re in serious trouble and you can’t manage higher repayments, consolidate or negotiate, it’s worth looking at the option.
Depending on how soon you recognize the seriousness of your situation, you may be able to get back on the track to financial health soon. Your credit will likely take a hit, but that’s much better than following the spiral all the way down to the bottom.