How to begin your debt recovery process

Trying to work out a debt recovery plan? Debt can be overwhelming, but there are certainly steps you can take to tackle it, depending on your individual circumstances. Once you have an understanding of your situation, you can start evaluating your options and best course of action. Here are some tips to help you manage debt!

Form a plan for paying back your debts

If your debt is on the more manageable side, creating a repayment plan is the best way to start. This is an ideal strategy when your debt isn’t too overwhelming, and you know you can make consistent payments. We recommend you begin by creating a list of all your debts, including the interest rates, the amounts you owe, and the payment due dates. It’s very important to make at least the minimum payment on all your debts so you ensure your debts will not continue to grow. It’s a common strategy to only focus on high-interest debts, but this might cause your other debts to snowball and result in late penalties. This is why contributing to all your obligations is essential! 

Create a realistic budget for the future

A big key to managing debt and debt recovery is taking steps to prevent it from recurring. In order to do this, you should create a detailed and realistic budget you can stick to. It should encompass every aspect of your finances, such as your income, expenses, debt, assets, and typical spending habits. The point of a budget is to keep track of where your money is going, and making sure you are not overspending in any areas. This can take some trial and error, so don’t be discouraged if your budget doesn’t work perfectly on your first try. Just keep working away at making a plan that accurately reflects your circumstances! If you need some help getting started, you can consider using a budgeting app. Most apps are simple to use, and they help you manage your money and create habits that are easy to understand. 

Should you consider debt consolidation?

Debt consolidation is a big step, but if you are really struggling to manage your debt, you should be open to considering this option. If you are not familiar with how it works, debt consolidation combines all of your existing debts into one lump sum. This means each month, you make one payment, with one interest rate, and this goes towards all of your debts. You are still repaying your debts in full, but this makes it easier to track. If you have good credit, you can also likely secure an interest rate lower than some of your current rates. 

Debt consolidation is a major decision because it will impact your credit in the short term as you adjust to this new setup. However, if you maintain consistent payments, over time your credit will improve. This is also a process that requires some time and energy to set up, so it’s important to make sure it is the best fit for you. That’s where a broker comes in! 

Consult a mortgage broker

Working with a mortgage broker is an essential part of debt recovery. This is especially true if you are looking at a major decision like refinancing or debt consolidation. These can be complicated processes that can easily overwhelm people who aren’t familiar with the industry. Your broker can guide you through the entire process, ensuring you understand your options and what they offer. They provide valuable insight specific to your situation so you can make informed decisions. Apart from being full of advice, brokers also have access to the lenders who make many of these decisions happen. Working with a broker ensures you will find the best product and lender for your needs. 

Debt recovery can be intimidating, but there are always steps you can take to ease the process! From everyday changes to your spending habits and planning a realistic budget, to looking at more comprehensive forms of debt management, we can help you find the right path for you. Be sure to reach out to a mortgage broker if you have any questions about dealing with debt! We are here to help you along the path to financial confidence. 

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.