As part of a 3-part series, leading online financial services provider, FinChoice, will offer helpful tips and advice on how to manage your monthly expenses as well as debt.
Debt can be stressful, lead to health problems and may eventually feel unmanageable. Here is what to do when the mountain of debt feels like you cannot climb over it:
Payment skip/ break
Instead of missing a payment and being in arrears, a payment skip offers a temporary solution to allow some breathing room for you if you are struggling with debt. A payment skip allows you to skip your monthly repayment for a short period of time, without negatively impacting your credit score at credit bureaus. A good credit score is important for any future purchases you may need to make such as a cellphone contract or vehicle finance. It is important to know that whilst a payment skip option offers a short-term solution, it will not change the size of your monthly repayment.
Payment restructure request
A payment restructure is an arrangement made with your credit provider which allows you to extend the terms of your debt agreement which then impacts the size of your monthly instalment. Many banks and other financial services providers offer this as an option so check with your credit provider if they have this available as an option. Note that the terms and conditions of your original repayment agreement will remain the same after a payment restructure process. Payment restructure requests are also evaluated individually as the restructure will depend on the interest rate you were being charged, fees, insurance, your outstanding amount and the original repayment term.
Debt consolidation
Debt consolidation involves taking out a loan to pay off smaller loans in order to minimize the pressure of various credit providers. It’s important to know that this is a temporary solution as the debt is still present, it is however sitting with only one credit provider thereafter. There are fees associated with debt consolidation and it may have an impact on your credit score. Very often debt consolidation is not an option for people with a bad credit score as they will very likely not get approved for a debt consolidation loan.
Debt Review
Debt review is a formal debt rehabilitation process which has a massive impact on your future. This process involves a formal debt counselor being appointed to liaise with all your credit providers on your behalf where they negotiate interest rates & repayment terms to create a reasonable new payment plan for all your repayments. This also means that:
- You cannot miss any payment for all your credit providers – or the payment plan will be annulled,
- You cannot apply for any other debt should you need it even for emergencies,
- You are liable for a fee for the debt review process and
- Your credit score will be impacted & you will be flagged by credit bureaus as a debt review client.
These are the information tips in the last part of our series on how to manage your debt brought to you by FinChoice. FinChoice. For when you need it. Find out more www.finchoice.mobi
