Causes Of Debt Issues
Over the years, we have operated in the debt consolidation industry, we have seen numerous reasons why people get themselves into unmanageable debt. Hence, then struggle to pay the debt off. However, when we look closer at each case, they tend to be categorized into the following four main reasons people get into debt :
- Illness. Loss of income from an illness is quite a common cause of debt problems. However, this can be from either the main breadwinner in a relationship or their partner that needs care. Therefore, the impact of the loss or partial loss of income can be added to by the costs of regaining or maintaining health. Illness can cause the most devastating financial issues because there could be long term inability to recover financially.
- Business Failure. Depending on the type of business, the amount of credit, and the reasons behind the failure, the severity of the debt issue can vary considerably. They may include bankruptcy or involuntary winding up of a business. All debts need to be paid for such as overdrafts, credit card debts, car and equipment finance, trade creditors and taxes for example. Banking facilities can generally remain, so long as payments are made. Trade accounts can be difficult to honour as these usually require a lump sum payments.
- Divorce Or Relationship Break Up. Amicable breakups where two parties discuss their debts can end with clear strategies toward moving on financially. However, emotions can get in the way with breakdowns in the relationship. The result can be credit card debts, complicated car loans, and mortgages not being paid.
- Loss of Job. The financial impact of losing a job is determined by the amount of debt and how a job is left. Other factors may include any termination payments made, the length of unemployment and the new income once back into employment. The effect of job loss on debts can also be different depending on a persons age and ease of finding a new job. Job loss is often a good time for strategies such as a credit card debt consolidation mortgage.
In all cases above, the faster a regular income is re-established and payments made against the debts the better. Acting quickly in these circumstances can improve your chances of sourcing finance for a Debt Consolidation strategy to ease debt pressure.
Another factor to keep in mind is communication with your creditors and lenders. There are avenues for various forms of hardship to obtain adjustments to their credit contracts. This is something we may also be able to help negotiate. Business credit may not qualify for hardship, however, it is still advisable to keep in communication with your trade creditors.