Course of actions to pay off debt without getting new loan

It turned out that even if you have to pay off every month more than you earn there is still a way how to survive without changing your name and running away to another country (which I don’t think is possible anyway).

It doesn’t matter about the future and how you might get this or that one job. It is now when you cannot afford to repay debt, not what might happen or not at a later date. Don’t make optimistic predictions about the future, deal only with the present. At this point you can do one of two things. You can either let events take their course, which will result in further interest being added until the time of the inevitable country court appearance followed by court costs. Or you can take some actions to stop the process.

1) First you want to start from preparing financial statement. It is very easy, Just put on the piece of paper all your income, min needed monthly expenses (such as food, transport, rent, etc), and all debt payments that needs to be done (make sure you put everything even a small ones, it will help you to see picture in general)

2) Contact all your creditors. You want to ask them to give you: a copy of original credit agreement, the total amount outstanding, what service charges or interest charges are being added each month, the interest rate (if applicable), is there any unemployment or sickness insurance attached to the agreement? (this apply only to loans and credit agreement)

3) After receiving answers, we can now start to make firm offers in an attempt to reduce the debt, or even eliminate it completely. Write offering to repay bills in monthly installments, instead of the full amount outstanding. Be sure that your monthly payment that you are offering to the creditor is the amount that you can actually manage to pay. Even if it is small sum like 5 euro, you don’t want to be seen as not trust worthy when you are not able to pay bigger amount.

4) Write a letter to the companies that gave you loan, asking to freeze interest, making sure the debt does not get any larger. There is no point stretching already tight finances making payments that only just cover interest and service charges, they never actually reducing the overall debt.

5) Your mortgage/rent – there is no reason at all to lose the family home especially, as in most cases, other options are always available. Turn to the Housing Benefit Office, they can help to arrange your monthly payment in terms of housing benefit which cost nothing for you.

6) Contact any other debt collectors you have such as utilities, student loans, credit cards and etc. Remember that most of the credit companies are more interested in receiving their money back rather than taking your possessions (especially now when their market price much lower than it was). Nobody will apply to the court if the amount of money you borrowed is around 200 euro. But if some of the companies want to take your case to the court, there are ways how to survive that situation.

Information provided above is taken from the book by Graham Willmott “Forget debt in 90min”. It is available in central library in Dublin city center. If you have more questions please contact me directly or read the book.