When attempting to reduce or eliminate debt, consumers should always remain aware of the fact that debts cannot vanish – they must always be paid in some way. However there are ways to minimise payments or save money when it comes to debt elimination.
Firstly if debts have become completely impossible to keep up with, consumers should consider debt counselling. This entails applying for debt review and allowing a debt counselling expert to restructure their budget and negotiate with creditors on the behalf of the consumer. This negotiation will result in reduced payments and interest rates.
Secondly a consumer can consider debt consolidation. This is the process of taking out a loan to pay off existing debts, thus only leaving the loan to be paid off over a longer period. This method can free up more disposable income for the consumer whilst settling debts that are subject to interest hikes and penalties. This method should only be considered if a consumer is not over-indebted and can qualify for the loan.
However there are other smaller methods that consumers can consider to reduce or eliminate debt. By selling off unnecessary items, consumers can use the money from that to settle smaller debts. Many credits are willing to reduce the amount due if a consumer offers to settle. This means that money can be saved on debt payment.
Lastly do not stick to the minimum payment on debts – instead always pay more than the minimum in order to reduce interest and chip away at the capital amount due. This will result in debts being paid off sooner and with less interest.
The fact remains however that the most effective ways to reduce and eliminate your debt is to bite the bullet and pay them.
Article written by: Andrea van Tonder 06-2013