debt pay

High interest on a debt can be detrimental to your financial success and overall well being.

Interest and fees can destroy your ability to manage monthly cash flows and prevent you from achieving your most important financial goals.

Additionally, a debt can lead to numerous health problems.

If you are in debt and want to try the option of making minimum monthly payments, you can pay interest for years.

The best solution is to tackle your debt with the utmost urgency by putting 110% of your effort and resources to eradicate the heavy debt burden in your life.

There are a large number of suggestions to help people become debt free, but many are useless or unrealistic.

I hope the solutions outlined in this post can provide some guidance for this arduous journey.

The most common type of Brazilian consumer debt is credit card debt, but the recommendations in this post may apply generally to any form of high interest debt.


Start Paying Off Debts With These 3 Strategies

Request value reduction

pay debts

Most credit card companies hardly forgive all debts on a card, but they occasionally accept a smaller amount to settle the balance with a promise to forgive the rest of the debt.

If you stop paying off your credit card and become delinquent, some companies may write off your debt and consider you “bad debt”.

However, this offers no benefit to you because this is not debt relief, legally speaking.

The credit card company simply records the debt as a loss – but the debt still exists, and can be sold to a third party for collection.

This is not the scenario you want.

Instead, you can offer a smaller amount to settle all debt.

The credit card company can accept your offer because a deal is much less risky than a lawsuit.

A lawsuit takes time and costs money, and the lender may still not get the full balance through the salary attachment.

If the lender agrees to accept your proposal, he will accept the payment offered and forgive the remaining balance of the debt.

You should not always expect someone from customer service to start calling to get a deal, you can also take the lead.

You will need to talk to someone in authority (sometimes called a “credit manager”) who can authorize debt settlement.

In addition, you can also look for a credit counseling company that can negotiate on your behalf.


Negotiate Best Rates

Negotiate Best Rates

Loan forgiveness is a very rare occasion reserved for individuals in difficult situations.

A much friendlier and possible scenario involves negotiating the terms of your debt.

Your goal is to work out a modified payment plan that decreases the amount of interest and fees paid.

To achieve this goal, consider the following:


You are a valued customer

debt loan

The first thing you need to realize is your value to the lender.

Because your outstanding balance holds a double-digit interest rate, you are a profitable customer.

The financial institution loves you because you are paying amounts of money each month.


You have other options

debt option

The next step involves doing your homework.

You can consider a number of other lending options including other balance transfer credit cards, personal loans etc.

If you can identify a more advantageous option, now is the time.


Find the right person

debt loan

After researching your available options, it’s time to trade. Don’t expect a simple phone call from customer service.

You need to immediately ask to speak with a credit supervisor.

When you get someone important on the line, start trading.

Say that you have enjoyed being a customer of the company and talk about how long you have been a customer.

If you have kept your current accounts for a period, be sure to mention that as well.

Also say that you enjoy the relationship, but have other opportunities available that will bring benefits and savings.

You are now ready to list the other options (lower interest loans, for example).

Also, say that you prefer to maintain the existing relationship if the manager agrees to match your competitors’ interest rates.

If your proposal is accepted, ask for the written terms immediately. They can write the document and send it to your home or by email.

If denied, do not accept defeat. Ask the dealer to provide their lowest possible rate.

If you still don’t like the offer, be ready to hang up and leave. You can try again later, or choose to transfer the debt elsewhere.

Maintaining the existing debt contract is not an option. Do not agree to continue to pay interest or abusive fees.


Debt Transfer

Debt Transfer

If you are unsuccessful in negotiating the amount or terms of your debt, consider transferring the debt.

You can transfer your debt to another institution to reduce interest rates (and monthly payments).

Paying less interest can help you eliminate debt faster, but only if you use the money as intended and stick with your debt settlement plan.


Final considerations

Although the 3 strategies taught are very interesting for you to start getting rid of debt, it is worth mentioning a very important point.

None of these strategies will correct the behavior that led you into debt.

Nor are they effective at controlling consumerism, meaning these solutions will not correct a problem of compulsive spending.

Therefore, you should examine the reasons why you got into debt.

If you are not 100% determined to get rid of your debt, do not waste your time looking for ways to reduce it, because that alone will not solve your financial situation in the long run.