It’s time to clear your old debt

Spring has sprung, and that means it’s time to make space for change by getting rid of the things you don’t need that hinders your progress. One of the things you should start with is your old or bad debt.

Bad debt or old debt can hinder you from making financial strides. It can hinder you from accessing credit. When you stop or skip your payments, it will reflect badly on your credit report and your credit score will drop. Besides being unable to obtain more credit, it may be difficult to find a job and your insurance premiums could be high.

What is bad debt/old debt

Bad debt/old debt is debt that you are no longer paying. It’s debt that you have fallen behind on. At times, you’ll find that the debt has been handed over to debt collectors. Many people think that there’s nothing they can do to catch up on their debt. However, there’s plenty you can do to ensure that you’re not only up to date, but you pay it off.

Know who and how much you owe

If you want to get rid of your debt, you need to make a list of your creditors and the amounts you owe. If your debt has been handed over to debt collectors, it’s up to you to get in touch if they haven’t contacted you, in order to make payment arrangements.

Negotiate a debt settlement or repayment plan

Once you’ve made a list of your creditors, contact them to negotiate a settlement amount or repayment plan. Sometimes creditors will offer you a settlement discount if you pay your debt in full at one go. When negotiating your settlement, make sure that the agreement is in writing. This will prevent your creditor from reneging on the agreement.

Create a budget

Once you know how much you need to pay your creditor, it’s time create a budget. If you already have the money, it is advisable to settle your debt in full. If you’re going to pay in instalments, make sure you create a budget that will accommodate your debt. Reduce your expenses if you have to. Downgrade your lifestyle or look for another job, but make sure you have enough money to pay your debt.

If you have many debts, there are various methods you can use to settle them. You can start with your smallest or your largest debt. Note that there are advantages and disadvantages to each method.

READ MORE: Prioritise your debt using the avalanche method

Get help

If debt is getting you down, DebtBusters can give you a fresh start. We can ensure that you pay lower interest rates, keep your assets, and free you from the burden before your debt falls into the hands of debt collectors. As a consumer champion, we can stop the creditors from hounding you. To speak to a debt counsellor, call 086 999 0606 or email [email protected].

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