How to manage your debt – Part 3 of 3

In 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 your debts.

Debt can be stressful, lead to health problems and can eventually seem unmanageable. Here’s what to do when the mountain of debt seems impossible to climb:

Payment skip/pause

Instead of missing a payment and being late, a skip payment offers a temporary solution to give you some breathing room if you’re struggling with debt. A payment skip allows you to skip your monthly repayment for a short time, without negatively impacting your credit score with the credit bureaus. A good credit rating is important for any future purchases you may need to make, such as a cell phone contract or vehicle financing. It’s important to know that although a skip-payment option provides a short-term solution, it won’t change the size of your monthly repayment.

Request for payment restructuring

A payment restructuring is an arrangement with your credit provider that allows you to extend the terms of your debt agreement, which then impacts your monthly payment amount. Many banks and other financial service providers offer this option, so check with your credit provider if they offer this option. Note that the terms and conditions of your original refund agreement will remain the same after a payment restructuring process. Payment restructuring requests are also assessed individually as the restructuring will depend on the interest rate you were 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 to minimize pressure from different credit providers. It is important to know that this is a temporary solution because the debt is still present, however it is seated with only one credit provider thereafter. There are fees associated with debt consolidation and this can impact your credit score. Very often, debt consolidation is not an option for people with bad credit because they will most likely not be approved for a debt consolidation loan.

Debt review

Debt review is a formal debt rehabilitation process that has a huge impact on your future. This process involves appointing an official debt counselor to liaise with all of your credit providers on your behalf, where they negotiate interest rates and repayment terms to create a new payment plan that is reasonable for all. your refunds. It also means that:

  1. You cannot miss any payments for all your credit providers – or the payment plan will be cancelled,
  2. You cannot request any other debt if you need it, even in an emergency,
  3. You are liable for a fee for the debt review process and
  4. Your credit score will be impacted and you will be flagged by the credit bureaus as a debt review customer.

These are the informative tips from the last part of our series on how to manage your debt brought to you by FinChoice. EndChoice. For when you need it. Find out more


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