Borrowing money at high-interest rates could also lead to the cause. All these results in a big debt trap wherein we are unable to repay the amount that is borrowed.
Debt trap is quite common these days and mainly occur due to overtime accumulation of debts. This debt could either be in the form of secure loans like a car or a home loan or could be a high-cost debt in the form of credit card loans that accumulate over a period of time
Therefore, it is a high time that we take up some crucial initiatives to deal with situations like these thereby reducing the amount of debt trap rates occurring in the country.
Methods to escape from debt traps:
Given below are some easy methods to escape debt traps:
1. Opting for debt consolidation
One of the best methods to deal with debt traps is by simply settling for debt consolidation. This refers to applying for a low-cost loan in order to pay off all the previous debts. This method of consolidating all the small accumulated debts into a single debt is quite beneficial since it provides lower interest rates and EMIs.
2. Plan Out your budget and stick to it
Always plan your budget efficiently in situations like these and make sure to spend less on unnecessary things. Try following your planned budget until you are financially stable.
3. Try paying the expensive loans first
In order to start paying off, all the debts make sure to strategize on the methods you will use to repay the loans. Try paying off the heavier debts first followed by the smaller ones. This will help you relieve your stress a bit faster.
4. Restructuring of your debts
In situations like a debt trap, you might find it extremely difficult to pay the high EMIs. A solution to this could be either a debt negotiation or a request for restructuring the payment schedule. Increasing the tenure and reducing the EMIs could also be an efficient method.
Credit counselling Services
When the amount of debt continues to accumulate you tend to feel stressed over your financial status. Thus, one of the best ways to hold a grip on to your financial status is by opting for credit counselling services that are available in Canada. This service basically aims at exploring various methods of debt repayment outside the bankruptcy. Also, it makes the debtors aware of various concepts such as financial management and budgeting.
The process of personal credit counselling basically involves effective negotiation toward the creditors in order to produce a Debt Management Plan. This plan basically works out various ways in which the debtor can possibly repay the loans.
Some Final Words
By considering the above methods, we could always try to be in a better position in terms of our financial conditions. Credit720 is a one-stop solution to end all the debt traps with effective solutions and the best credit counselling services in the area.