Here is what you should know if you are summoned to a pre-trial hearing for debt collection. There are several things you should know as a consumer to protect …
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We found that potential debt review applicants need and want to know the steps of the debt review process. Below we made a short summary for you, to provide you some indication on what to expect.
1. If you feel you are over indebted you would need to contact a debt counsellor to do this application.
2. You will apply for debt review by completing and signing a Form 16. Keep your ID, latest payslip ready as well as the latest statement of each creditor. It is very important that you provide the debt counsellor with ALL your creditors.
3. The debt counsellor will inform all creditors and credit bureaux that you have applied to be under debt review. From this stage your creditors will not be allowed to take legal action against you for the following 60 days. This is only valid if a creditor did not already start with legal steps.
4. The creditors will need to supply your debt counsellor with outstanding balances and initial contracts (where applicable).
5. The final step will be for your debt counsellor to assist you with your budget (income less expenses) and to determine what amount will be available for distribution on a monthly basis to your creditors.
Feel free to contact us, to assist you with debt review.
How to get out of a situation where you can’t honour loan obligations such as paying your loan EMI. Here are 5 tips to get out of what is called as debt trap and take charge of your finances.
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Hello and welcome to FundooMoney, your 24X7 buddy for all your money matters. We have all heard about the word “debt trap”. But what exactly is it? Well, debt trap is situation where you have taken so much debt or loans that you find yourself unable to even service the monthly interest. You actually need a loan to pay the interest and hence end up increasing your debt. This is a vicious cycle created in the first place due to excessive and high interest rate borrowing. You need to create and work on a plan diligently to get away from this financial mess. Shortly, we tell you the essential steps that you need to take in such a plan.
Pay off high cost debt at the earliest
Prioritise all your debts based on interest rates. Get rid of highest cost debt such as those of credit card outstanding that typically charge 40% annually. If the outstanding amount is too large, take a personal loan or do a balance transfer on EMI on other credit card. This could bring the interest rate to a more manageable level of around 12-15%.
Consolidate medium cost debt
If you have many small value loans like consumer loans, personal loan or credit card dues, it would be better for you to bring all these loans at one place by taking a personal loan or debt consolidation loan at a low interest rate. You can interact with your lending institution for this.
Look for low cost alternative
If you have high interest rate loan like a personal loan, you could take a lower cost loan, typically loans against assets such as gold, car or property to pay off the high cost debt.
Try extending the tenure
If you are likely to find it difficult even to pay off low cost EMIs, consider extending the tenure of the loan to manage the repayment obligation. Secured loans should typically allow you to have a long tenure. This will keep the EMI under check. Once your income rises or you get any windfall gains, you can utilise that amount for faster repayment of your loan.
Liquidate investments if the need be
If all of the above steps are not enough, consider liquidating some investments such as idle gold or property. Try to view this move without emotion. Consider the loan repayment burden a cost of retaining these investments with you. Once outstanding loans are repaid, you could use the money to invest for your future.
We hope you found this useful. Do share with us and others on the channel your tips for getting out of debt trap, by writing in the comments section. For more such actionable personal finance information and regular uploads, subscribe to our channel. Also, visit our website, download our mobile app and stay connected with us on Instagram, Pinterest and Slideshare.
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What is DEBT CONSOLIDATION? What does DEBT CONSOLIDATION mean? DEBT CONSOLIDATION meaning – DEBT CONSOLIDATION definition – DEBT CONSOLIDATION explanation.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.
Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. This commonly refers to a personal finance process of individuals addressing high consumer debt but occasionally refers to a country’s fiscal approach to corporate debt or Government debt. The process can secure a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan.
Debt generally refers to money owed by one party, the debtor, to a second party, the creditor. It is generally subject to repayments of principal and interest. Interest is the fee charged by the creditor to the debtor, generally calculated as a percentage of the principal sum per year known as an interest rate and generally paid periodically at intervals, such as monthly. Debt can be secured with collateral or unsecured.
Although there is variation from country to country and even in regions within country, consumer debt is primarily made up of home loans, credit card debt and car loans. Household debt is the consumer debt of the adults in the household plus the mortgage, if applicable. In many countries, especially the United States and the United Kingdom, student loans can be a significant portion of debt but are usually regulated differently than other debt. The overall debt can reach the point where a debtor is in danger of bankruptcy, insolvency, or other fiscal emergency. Options available to overburdened debtors include credit counseling and personal bankruptcy.
Other consumer options include:
debt settlement, where an individual’s debt is negotiated to a lesser interest rate or principal with the creditors to lessen the overall burden;
debt relief, where part or whole of an individual debt is forgiven; and
debt consolidation, where the individual is able to acquit the current debts by taking out a new loan.
Sometimes the solution includes some of each of these tactics.
The bulk of the consumer debt, especially that with a high interest, is repaid by a new loan. Most debt consolidation loans are offered from lending institutions and secured as a second mortgage or home equity line of credit. These require the individual to put up a home as collateral and the loan to be less than the equity available.
The overall lower interest rate is an advantage of the debt consolidation loan offers consumers. Lenders have fixed costs to process payments and repayment can spread out over a larger period. However, such consolidation loans have costs: fees, interest, and “points” where one point equals to one percent of the amount borrowed. In some countries, these loans may provide certain tax advantages. Because they are secured, a lender can attempt to seize property if the borrower goes into default.
Personal loans comprise another form of debt consolidation loan. Individuals can issue debtors a personal loan that satisfies the outstanding debt and creates a new one on their own terms. These loans, often unsecured, are based on the personal relationship rather than collateral.
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There are criminals that try to scam people out of money. If you get a call about a debt, this video will help you with what to do.
Debt review, debit counselling, how to reduce your debts, debt reduction,
