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How to deal with credit crunch

In the recent past you might have noticed the sudden downfall of the entire financial panorama which eventually resulted in the market getting affected by credit crunch. Recuperating from credit crunch is a little difficult at times. During a credit crunch, banks and investors try avoiding lending funds to business corporations, which elevates the debt products prices’ and thus borrowers end up paying more.

So how do you deal with the credit crunch?

  1. If you have any borrowings and have funds to discharge off the outstanding payments, pay it off and don’t wait till the last minute as you might end up paying more if there’s a credit crunch.
  2. You can safeguard yourself and earn the maximum number of benefits when you have your job in place. There are various schemes which the employer has to offer to its employees to take care of the taxes, mortgages or debts, etc. So even if you’ve lost your job, but if you are covered under the payment protection insurance, you can still take care of your debts during credit crunch.
  3. It is important that you prioritize your expenditure on your borrowings first. So if you’ve to make a loan repayment, make sure you do that first, before you end up spending your monthly remuneration for other stuffs.
  4. As soon as you get your monthly take home, plan a budget on how much you need to pay towards your bills, or other payments.
  5. As the month starts and you’ve money to repay the due amount for the month to all your creditors, start getting in touch with all such creditors and make your payments at the earliest.
  6. If there are a number of creditors line up and you don’t have enough money to pay your due to each of them, sit and talk to them and negotiate the due to a small payable amount if not the entire sum. Most of the creditors are flexible with negotiations provided you have the gesture to pay.
  7. If the contact person (creditor) is not flexible, you can even try talking to someone higher in position. Perhaps they would understand your situation and that you’ve good intentions to pay.
  8. Whenever there is any transaction, make sure you keep a record of all the paperwork you send or receive. This helps you to keep a track of the dealings on your own and check if any discrepancy.
  9. It has been observed on couple of occasions that people tend to borrow money to repay their outstanding debts. It doesn’t seem to be a good idea to fall into the same pit when you’re actually trying to come out of it! There are companies which could offer to combine all your loans and might ask you to keep your house or other property papers with them till the loans are settled.
  10. If there is any kind of failure from your side and the creditor takes you to the court, make sure you reply to all the letters or paperwork sent by the court with immediate effect. Don’t miss any court hearings if you get summoned. And provide all the details regarding your mortgage to the court.