Top 5 Things You Can Do to Lower Monthly Payments

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Houses: we live in ’em. Cars: we drive them. Credit cards: we buy groceries and the occasional indulgence with them. But the truth is, sometimes we can’t always pay back loans and lines of credit like we originally intended. So now what? Simply not paying monthly payments results in late notices and bad credit scores, not to mention harassing phone calls at all hours of the day and night and the possibility of the repo man showing up at three in the morning and taking our car. Fortunately, there are a few things you can do to lower your monthly payments and keep a few extra bucks in your pocket.

5 File for Bankruptcy

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Sometimes there’s nothing left to do but wave the financial white flag by declaring bankruptcy. In rare cases, bankruptcy—either Chapter 7, which eliminates your debt, or Chapter 13, which reduces debt interest rates, principal balances, and consolidates multiple debts into one—may be the only feasible way out, especially if you are in over your head and realistically will not be able to dig your way out in the near future. Contact a bankruptcy lawyer to find out which type of bankruptcy is best for your situation, and how to begin filing proceedings. Keep in mind that your credit score will tank, and a bankruptcy filing will remain on your record for up to 10 years, but on the flip side, you’ll be able to keep a roof over your head and the debt collectors at bay.

4 Consolidate Your Debt

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It’s possible to stop juggling multiple debts with varied interest rates, due dates, terms, and fees by consolidating them into one. Under a debt consolidation program, your debts will be merged into one debt with one interest rate and one due date—not only is it simpler and easier to keep track of, but it may leave you breathing a sigh of relief—and it will keep your creditors satisfied. Debt consolidation programs can often result in you paying a lower interest rate overall, which means saving not only your credit score, but a few bucks, too.

3 Plead Hardship

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If financial hardship due to job loss or medical problems is to blame for your debt piling up and your monthly payments putting too much of a strain on your budget, inform your credit card company or financial institution—and ask for their help. You may qualify for what’s known as a “forbearance” plan. Under this type of plan, your monthly payments can be reduced, or even deferred for a time. Be prepared to review your financial situation and to produce relevant documentation, such as pay stubs and medical bills.

2 Transfer Your Balance

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Transfer your credit card balance from the high interest rate card to a lower interest rate card. Check with competitors, and in particular look for special introductory offers, as these often offer super-low or even zero percent interest rates. Crunch the numbers: even if you have to pay a balance transfer fee, you may come out ahead, particularly if you have a high balance or a high APR. Just be sure to check the fine print on the new credit card, as often those introductory rates are just that—an introduction to the new credit card. The rates typically go up after a few months—or even sooner if a payment is late, even if only by one day.

1 Ask for a Lower Interest Rate

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Credit card companies and financial institutions make a killing on interest rates. But while they should profit, do they need to do so excessively? Of course not. Check your bill statements to find out your annual percentage rate, and then call the company to find out about getting it lowered. Don’t be afraid to quote competitors’ rates to them, and let them know that you’re shopping around, since it is possible to refinance a loan or have a credit card balance transferred from one creditor to another. If you’re lucky, the company will say yes, and offer you a lower rate. If you don’t ask, you’ll never know.

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