Credit cards are issued by banks for their clients who then have the benefit of buying goods and services but paying for them later. Additionally, to the payment for the goods bought the credit card holders also have to pay the interest when is actually quite high. It is quite common for card users to be trapped in a credit card debt.
The Australian government provides help for debt relief in many ways. For instance their official website of debt relief can be accessed or their help lines can be used. Free financial and legal advisors are also available, who may come up with the best possible solution for you and also help you with the paperwork. Though you have to make sure they are operating legally and are experienced enough. Furthermore, a lot of information about the rules and regulations can be accessed at the official AFSA (Australian financial security authority) website. You can also get the link of the Debt agreement administrators contact list in order to find a registered debt agreement administrator. In case the matter is not being solved by the parties involved external help can be taken from free external dispute resolution (EDR).They play the role of an arbitrator who settles the dispute. Moreover, the benefit of using this is that the lender cannot take legal action while the matter is being considered by an EDR scheme.
Some of the best debt relief tips for credit users that might be of help are mentioned below.
Realistically planning and setting a budget:
The most important step that first needs to be taken is to make a plan about how you’re going to pay back your debts and then stick to it. The most realistic plans are the ones that are made keeping in mind S.M.A.R.T. That stands for specific, measurable, realistic and timely. Furthermore, they should be checked time after time to make sure you are following them. A budget should be made that you should follow every month in order to keep your expenses in check so that you can pay your debts as quickly as possible. In addition, you should literally stop using your credit card any further since you already are in debt and further using it will most probably deteriorate your financial position. This may seem like a difficult step but it’s is definitely going to be worth it.
Negotiate with creditors:
Another way is to negotiate with your creditors to lower the interest rates; you can either do this yourself or take help from the counselors to make sure you get a favorable outcome. Lower interest rates mean you now owe less amount of money. However, a favorable outcome also depends upon your credit history and the amount outstanding.
Using the balance transfer option:
Balance transfer means that you can open a new account and transfer all the balance in it. This is beneficial because the new card gives you 0% APR (Annual percentage rate) as an introductory offer. Therefore, you don’t have to make the interest payments hence whatever payments you make decreases your debt. However, for this to work certain conditions need to be met like the requirement of a high credit score. The conditions may vary depending on the bank you’re dealing with.
Debt consolidation:
Debt consolidation means taking one big loan to pay off all the other loans. So now you just have to deal with one creditor which is comparatively easy. Debt consolidation can prove to be a rational choice when it comes to this case because; banks charge really high interest rates for credit cards hence a personal loan with lower interest rate can be taken to pay off the bank.
Debt management plan:
With the help of counselors’ debt management plan can also be used. This is where the counselors carefully assess your financial position and negotiate with the creditors aiming to reach such an outcome that suits your budget. For instance, they can negotiate for lower interest rates or get you rid of penalties and fines.
Decreasing expenses/increasing income:
You should also focus on decreasing your expenses or the other way around increasing your income. Income can be increased by working overtime or looking for part time jobs. As through these ways, you will have more money that can be paid to decrease the level of debt.
Debt settlement:
The option of debt settlement can also be considered. This is when both the creditor and debtor settle for an amount of money that is less than the original amount. Therefore, you make a lump sum payment and the creditor writes off the remaining balance. However, this is a difficult one to achieve since the creditor rarely agrees to a low amount moreover; making a lump sum payment can be difficult for the debtor.
Debt refinancing:
Debt refinancing can also be used that is when a loan is replaced for a better one. That means that the new loan offers better interest rates and other terms. Hence, this is one way of reducing expenses and saving more money to pay off debts.
All the ways mentioned above can help you recover from debt however; it is always recommended that you take help from counselors who can come up with a solution best suited to your situation.
