The number of debtors is increasing at an alarming rate. Owing to the bursting of the housing bubble and its ripple effect, the National Debt has increased several times. As per reports, the National Debt has been increasing on an average of USD$3.42 billion per day. The increase has been taking place since 28th September 2007.
The incidence of non payment of debts has increased and this can be attributed to the fact that more and more people are availing credit cards. However, they don’t repay the loan amount within the specified time period. It leads to the piling up of debts and you find yourself in a vicious cycle wrestling to get out of it.
It may just take few months or at the most a year to fall into debt but it may take a long time may be several years to become debt free. It is often seen that a lender will allow you to make payments in small amounts and with an extended loan term. It may appear that the lender is kind enough to allow this but you are the ultimate loser.
There are a number of debt relief programs you can choose from depending on your existing financial condition. Some of the widely availed debt solutions are –
- Debt consolidation
- Debt settlement
- Debt Management Program
- Self repayment
- Bankruptcy
Enjoy lower payment but know the adverse effects : Whenever you opt for a debt relief program, in majority of the cases, you are granted a repayment schedule which allows you to enjoy lower monthly payments. If you are shelling out a minimum amount every month, by the time you wrap up your debts you will have paid 3 times your original loan amount. This may be better understood with an example.
For instance, if you buy items worth USD$5000 and if you are making minimum payment (you are asked to make at least 2% of the loan amount), a large part of your payment goes towards interest and only a small amount towards the principal amount. In this way, you will be paying more for the particular item you have bought when you are almost nearing the end of the loan term. So, it is always better to pay little more or if possible well above the minimum balance when you make payments for your credit card bills.
Some References:
My Story For Getting Out Of Debt Read my personal story for eliminating my debts.