Are you caught up in a debt trap? Here are some useful options for you

Anyone anytime can incur debt. From start-up business owners, successful entrepreneurs to individual credit card holders, everyone can face a debt trap in their life, which can be very difficult to manage and clear off. According to 2017 research statistics, the overall revolving debt for Americans was calculated to be more than $1 trillion. Therefore, if you are panicking and fretting because you’ve incurred a debt, know that you are not the only one here.

Has your credit card reached its maximum limit? And to sort this situation, did you get a new card, maxed it out as well and doubled the debt amount? Many start-up entrepreneurs and individual cardholders have done the same. When you pay the bare minimum on your credit cards every month, it indicates that you pay the interest. Caught amidst all these situations most people and business person are terrified to keep a check on their credit score, knowing it’s going down. Credit card debt is a vicious cycle and coming out of the same will require smart and practical financial planning.

Entrepreneurs and debt

Today, both start-up and established entrepreneurs need money for their business expansion and other business development activities. Getting caught up in debt is nothing unnatural as start-ups function with limited funds. From spending on inventories, new product launches, promotional events, branding, and advertising initiatives, paying employees, utility bills and the like, all require money.

There’s no magic in moving out of the debt! Instead, it’s essential to plan your repayments in a way that you don’t add extra financial burden and repay the debt entirely, taking one step at a time. There are several ways in which personal finance management professionals guide both individuals and entrepreneurs to settle their existing debt before it becomes out of reach. Discussed below are ways that show how you can manage and repay your credit card, business or loan debt in a streamlined manner.

  1. You can negotiate with your credit card company

Regardless, of the nature of your financial crisis, this is one smart call that you can take! Go ahead and make a call to your credit card company and speak to the apt professional. Explain to them your present financial holding, the debts you have at hand and also ask for a probable solution. There are instances where the credit card companies might be willing to co-operate with you as they want to continue the business.

  • The possible benefits

It could be a smart solution to pay off all your debts! Your credit card company might provide you with a minimum payment term, grace period, an alternative payment plan as well as a low-interest rate. Simply put, it is precisely what most debt relief program offers to its customers. However, while you are at it, don’t fall for commercials that guarantee you to make you debt free within just 24 months and many more. Chances are you might end up paying even more and hurt your credit and credit score. And it can leave you much more financially burdened than you are already now. So, keep your negotiation on with your credit card company and check what transpires of it.

  1. Advanced debt management programs

You need work hand in hand with a credit counseling agency to opt in for a debt management program. It is here that you can opt-in for debt consolidation loans as well. When you seek help from debt management programs, you have access to organized repayment plans where you can repay your entire debt amount between three and five years. Under this program, your debt can have a minimized rate of interest.

When you sign up for a debt relief program, you work towards lowering debt and keep making monthly payments, to gather a payoff amount. It has to assure that all the creditors will settle. You might affect your credit score negatively as well. However, debt management program saves you from all this.

  • The possible benefits

When you say yes to a debt management program, you have access to consolidated and straightforward payments. You don’t get hassled by increasing calls and follow-ups from your creditors. The program will assess your present debt condition and allow you to figure out your choices, just in case a debt management program isn’t applicable to you. You also get a reduction in the fees and interest rate.

  1. Balance Transfers

A balance transfer is yet another way to manage your debts. Entrepreneurs or individuals who are facing a high-interest debt, for them this can be a perfect choice. Regarding a fee, many credit cards provide as much as 0% fewer transfer choices for a chosen period.

  • The possible benefits

When you sign-up for balance transfers you can minimize the interest that you pay for a selected span of time. When you transfer many cards with a single transfer offer, you have the chance to consolidate the payments.

  1. The Home Equity Line of Credit (HELOC)

HELOC is also one of the most preferred ways for people in business and otherwise to settle their debts. Simply put, it’s a revolving credit line that’s secured by the home equity. And you can utilize this line of credit for any purpose you deem fit. One of the goals could be to repay a high-interest rate debt. Similar to your credit card, entrepreneurs have the choice to borrow against it. You can pay it off entirely and then hire again.

  • The possible benefits

The apparent advantages with this line of credit for debt repayment are the low rate of interest. Other benefits include the consolidated payments and also a deductible tax interest.

No entrepreneur loves to be caught up in a debt trap for long! It affects everything from business expansion to taking crucial business decisions, which in turn has an impact on profits as well. Today, there are several ways to consolidate your business and credit card debt. If you don’t know where to start, you can refer to the methods mentioned above and select the one that best suits your requirement and start clearing your debt.

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