For many people, when money problems hit they solve it with more credit. Opening up a new credit card or taking out another loan can often seem like a good idea to keep you afloat. Payday loans might be appealing as they offer short term solutions for keeping the wolf from the door, but sadly taking out debt after debt will leave you with a stack of monthly payments that you won’t be able to afford to make. You will end up struggling for money even more in the long run.

Getting out of debt with bad credit can seem scary. You may feel as though you are stuck in the position that you are with unwieldily large payments on your current debt, many of which only cover the interest and don’t reduce the overall sum that you owe. It can be very disheartening not to be able to see a way out of your problem, and knowing that your debt is not going actually to reduce can make you feel trapped.

Getting The Help You Need

There are ways out of the situation that does not involve insolvency. Having the right help and support is essential, so in the first instance, speak with citizens advice or a debt relief charity to see what information you can get from them. 

Consolidating Your Debt

One of the problems with having multiple debts to different lenders is that you will have several payments going out each month, each with their own interest added. Often, this means that a fair chunk of your debt repayments ends up being interest repayments and some of your balances will never actually reduce. You will be locked into paying a similar amount each month for a very long time unless you make a change. 

Consolidation loans may still be available to you, even if your credit rating is not great. There may be the option to secure the loan against your house or car. This will offer lenders the reassurances that they would be able to reclaim their debt in the event of a default. However, if you manage the situation correctly, you will not end up missing payments, and you will clear the debt. 

A consolidation loan takes all of your debts and adds them together. So instead of dealing with several companies, you will just owe money to one. You will find that your overall payments become lower and there will be an end date when all of your debt is cleared. 

Maintaining A Healthy Relationship With Debt

Once you take out this type of loan, you should close all of your credit cards and ensure you do not add to your debt anymore. You may be tempted to take out another loan or to keep your credit cards. However, this may leave you open to creeping back into unmanageable debt. 

Once you are making your regular payments, you could look at other ways of improving your financial health, such as canceling any unused subscriptions or switching insurance or energy suppliers.