Well, they say that there is no deadline that is not met and, when it comes to debt, we are all obligated to pay it. However, when everything goes out of control we start to feel anxious and have a bad time, but that stage has a resolution: refinancing and its different forms.
Join us in this article in which we will know the main types of refinancing or refinancing of debts. First, we will see how to get to a situation of this type, and then analyze what path can be taken to solve this problem.
Refinancing can be a great way to deal with the problems of over-indebtedness of a person. These situations generally arise from the misuse of credit cards, consumer loans or loans that stop paying or are in their payments for some reason.
In reality, if you have acquired a commitment of this kind, you must be aware that failure to comply with it can bring many negative consequences such as over-indebtedness, a bad credit history, family conflicts and much anguish that can turn into depression.
Something you need to know before seeking refinancing is that while this solution can bring personal relief, you can also increase the amount of interest to be paid even though a lower rate is set.
The conditions of your debt can change and even if you do not commit to liquidate it, it could represent a problem.
First thing’s first.
How do I know if I am over-indebted?
Surely before you could perceive how your monthly salary reached you perfectly then it was that you decided to hire a loan- check that. Everything was going well and you were able to acquire things that you needed like some appliances and technological devices.
However, one fine day and almost without knowing why, you became indebted. Of course, you first lost the notion of what was a beneficial debt and a negative debt so that’s why you did not worry until later.
Let’s say that in principle you were “fine”, you could pay even a little while living on credit until time gave the final thrust: you could not pay for that financing that probably came in the form of a bank credit card.
And that is over-indebtedness: when your salary is not enough to pay for your debts, or your basic expenses such as the purchase of a pantry, the payment of basic services, and other important things. When that happens, it is a serious level of over-indebtedness.
If you detect this situation it is important that you realize that this did not happen “overnight” or by magic, but largely depends on bad habits of consumption, little care of the financial commitments acquired, and a bad planning of your income.
Therefore, a refinancing solution could help you to take measures to face the consequences of a bad payment of financial commitments and there are those who dare to affirm that they are the best option to come out in a situation of over-indebtedness.
Different forms of refinancing
There are a number of ways to which we can call refinancing, the point is that they are all different but consist more or less in the same: unify many debts into one, set a more affordable payment deadline, reduce the interest on the debt and In addition, improve the contracted plan.
An option that you should discard from now is “stop paying, they will not do anything to you”. Among many people who promote the culture of delinquency, it is said that the failure to pay a debt will not bring negative consequences.
Sure, maybe you do not go to jail, do not take anything away and a few years (five or so) stop looking for you, but the reality is that your credit history will be ruined and the next time you want to ask for financing they will reject you.
Think about the following: do you want to escape your debt and sacrifice a future that could be supposed to be a financial success? Do you want to condemn your personal development and leave behind the idea of forming a heritage? Do not think that way! Take care to liquidate your commitments and start growing.
Go to the institution that gave you the card
Banks and credit cards are the main sources of indebtedness. When we do not make good use of our cards or we have too many, it is common that at some point we stop paying or forget the payment deadlines.
It is also common for people to make only the “minimum payment” on their card and start paying interest month after month. The recommendation is that you always make the “payment not to generate interest” and thus get rid of worries.
But if you started to get into debt and cannot sleep thinking about everything you have to pay, then you should think about going to the bank that issued your card (or more than one) to request a refinancing plan.
You should try to renegotiate the debt with the bank. The most probable thing is that this possibility is the order of the day because it is a way that the banking institutions have set so that the debtors can liquidate their commitment.
However, sometimes the conditions of this renegotiation are somewhat difficult or represent a disadvantage, but refinancing your debt instead of paying it off can be better. The recommendation, in fact, is that at the minimum sign of lack of solvency, you should talk to the banking institution in question.
On the other hand, the process of refinancing can alter your credit history because, although this is already affected by your lack of payment, the conditions of the same will not improve.
Refinancing with the bank is done at the right time, in this way you avoid a bad score in the Credit Bureau and avoid problems with loans in the future.
Refinancing a payroll loan
Another form of refinancing is to request a loan or credit that is deducted via direct debit from your bank account. When you apply for a loan of this nature it is about integrating all your debts into one.
When applying for a direct debit loan, you can pay the total amount of your debts at one time. The most common is that you use this alternative if you have fallen behind more than three months in the payment of your fees.
Now, if you want to settle a debt belonging to a credit that is deducted via payroll, you can go to one of the Sofomes authorized for this type of transaction and ask them to extend your line of credit to settle your commitments.
Credifiel, offers you an alternative so that regardless of situations of non-payment in your dependency of secondment in the government you can liquidate your commitments. This is achieved through the direct debit of the discounts for payment directly to your bank account.
What are the advantages of refinancing
1. Refinance allows you to improve your current payment plan as the terms are extended and you have more time to settle your debt.
2. Payments become more affordable as they decrease as the number of installments to pay increases.
3. Regardless of whether the value of the credit increases, as a debtor you can be calmer that the new fee imposed on you will not affect your income as it happened initially.
4. With refinancing you can keep your personal needs such as payment for services, food, and rent, without worries.
5. With the refinancing, you will leave behind the delinquency and you will begin to have a more stable financial situation.
6. All financial institutions have refinancing plans, you can use it, but the initial recommendation is that you avoid getting into trouble.
As a useful closing tip, before hiring a loan or credit, consult all the terms and conditions of it and avoid getting into trouble.