We often hear rising non-performing assets of the bank which is nothing but businesses or individuals are having difficulty paying their loans or credit card repayments. But why is it becoming more and more difficult to repay your credit? There are various reasons for this. For example, fall in interest rates, encourages households to borrow more.

So how do you get out when debts start to accumulate and the situation gets out of control?

1. List your credits and reduce your expenses

Take stock of your situation to assess your ability to repay on time. Repay credits with high rates first if you can’t pay them all at once.

It is often not easy to reduce spending in a consumer society like ours. List the monthly expenses that you must pay. Example: rent, energy bills….

On the other hand, you can also try to renegotiate with your suppliers: change your car insurance if it is too expensive or your telephone/internet subscription to reduce your costs. You need to limit unnecessary expenses like the latest iPhone 6 or a new TV.

2. Talk to your banker and ask for a lower rate

Bankers are not necessarily the first people you want to talk to about your debts, but they are the only people who can help you and provide solutions. Don’t be afraid to review your situation with them as soon as you feel that debts are starting to accumulate. The sooner you do this, the easier it will be to manage.

If you have been able to repay your loans on time so far and have built a relationship based on trust with your bank, your bank may offer to lower your credit rate. If this is not the case, ask your bank what other solutions are available to help you.

3. Consider taking out insurance

Personal loan insurance is not mandatory, but can be useful to cover death or disability. If you do not have insurance, it is important that you talk to your bank to find a solution to help you.

4. Opt for a credit consolidation or a credit repurchase

A credit repurchase can be a solution to lower the interest rate and to see your situation more clearly. You can take out a new loan with another company to repay all your outstanding loans and reduce your overall monthly payment. On the other hand, a credit consolidation will require you to pay your credit over a much longer period to compensate for the decrease in monthly repayments. Talk to your bank to see if this is the best solution for you. Also consider closing your revolving loans.

5. Use non-judicial debt mediation

If you are facing temporary difficulties that jeopardize your financial situation or if you are facing prolonged over-indebtedness, you can resort to non-judicial debt mediation. It constitutes personalized assistance by persons designated by law or by public or private institutions.

6. Consult the collective debt settlement

Collective debt settlement is a legal procedure to try to remedy situations of over-indebtedness that have become unmanageable. It enables people to regain living conditions consistent with human dignity and to repay all or part of their debts, as far as possible.

It is important to think carefully before taking out a loan so that you will be able to repay it. Pay attention to your expenses and manage your budget well.