19 Nov Breaking the Chains: A Step-by-Step Guide to Debt Clearance

Our Credit Boost team of professionals has put together a step-by-step guide to debt clearance, to give you some direction and get you started on your journey to financial restoration. No one wants to be stuck in the debt trap, just as no one intends to struggle with money or depend on credit to survive. In a world where money is the only way to get food on the table and afford your bills, many end up relying on credit at some point to relieve the pressure.

A Step-by-Step Guide to Debt Clearance with Credit Boost

Determine where you stand:

If you’re in a position to afford and manage your debts without help, here is how to clear your debts more quickly. We always recommend paying back more towards your debts than is due each month if possible. Find out how much you can add to the monthly instalment made towards your smallest account first, as part of the Snowball Effect. Then eliminate this account as quickly as you can. Move on to the next low debt and work through each debt this way.

In our step-by-step guide to debt clearance, we also look at the Avalanche Effect. This works the same as the Snowball Effect, however, you arrange your debts from highest to lowest and, after allocating the necessary funds to afford the minimum payments on each account, you use whatever additional cash you can towards paying off the accounts with the highest interest rates first, one at a time. Reducing outstanding balances sooner also reduces the interest amounts owed on them.

Benefit from Debt Review or a Consolidation Loan:

There are professionally guided options available to struggling consumers. Debt Review can help if you are over-indebted, while a Consolidation Loan can provide balance in your budget and make your repayments easier to manage.

If you find that you can’t afford your living expenses once you have repaid all your creditors, it is likely that you are over-indebted and need to work with a National Credit Regulated Debt Counsellor to negotiate lower repayments and reduced interest rates. Debt Review gives you immediate financial relief and also protects you from harassing creditors and the looming threat of legal action.

A Consolidation Loan is easier to qualify for and is essentially one large loan that is taken out to repay all your existing loans. By doing so, you have just one reduced monthly repayment to make, as well as one interest rate. You save money and don’t have to worry about multiple debt repayments that are becoming difficult to cope with.

Clear your Credit Score:

After successful Debt Review completion, you are given a Debt Clearance Certificate and can start to rebuild your credit score. If you repaid your debts yourself or with help from Debt Review, pull your credit report (we can help you with this at no cost!) and assess it. Once you know what your credit report looks like, you can begin to work on clearing it and establishing trust with potential lenders down the line.

At Credit Boost, we look forward to working with you to boost your credit and improve your relationship with money.