Important Benefits Of Paying Back A Reduced Amount Over Paying Off Debts In Full
If a family member, parent, friend, or someone else is willing to pay your debts off for you, should you let them?
Most clients who we have spoken with after making this mistake have shared that they wished they had not paid back their unsecured debts in full. They often said, “It was the worst mistake I’ve made.”
Read on to discover some very important information that could save you a considerable amount of frustration and money.
Let’s say that you do come across that lump sum of cash needed to pay off your debts.
Before you spend a dime of it, you must do a financial analysis of your situation.
Let’s look at the financial analysis:
Is This Money You Received Going To Be Ongoing?
For example, let’s say you will now be receiving $50,000 extra every year in a bonus. Or, as another example, your new product is now selling in your business and you anticipate making a lot more each year than the debts you have.
If this is the case then it would make sense to pay your high interest rate debts or back taxes due in full.
Do You Have Enough Cash In The Bank For 4-6 Months Expenses In Case Of An Emergency?
Do you have enough cash in the bank to live comfortably if something were to happen and you couldn’t use credit for at least 4-6 months? If not, then this should be your priority! You never know what can happen, and cash is king.
Is This Money From A Friend Or Family Member Trying To Help You?
The gesture is incredible and you must be a great person to have them willing to do this. First review the cash in the bank and take care of that first. Four to six months of living expenses is critical.
Keep in mind too that parents often want siblings to pay off debts in full, but most clients told us that it was the wrong decision to do so. It was much better, they said, to have cash in the bank and pay back a legally reduced amount. The cash in the bank also gave some breathing room so that they could get their solid financial footing – which was ultimately the intent of the parents in the first place.
Do You Anticipate Your Financial Situation Getting A Lot Better Immediately?
If the lump sum is one time and you don’t anticipate an immediate change for the better, it would make sense to take advantage of the legal options to pay the lowest amount for taxes due or for unsecured creditors.
The government has enacted laws to take into account that you do not have as much money as a CEO of a fortune 500 credit card company, for example. These laws give you benefits to help reduce the burden of the debts so that you can start to have money in your bank account for emergencies and excellent financial success going forward.
How Is Your Credit Worthiness?
Credit worthiness is your ability to pay back a new loan. For example, if you have no money every month after paying bills and no money in the bank, you are not very worth credit-wise. The best solution is to first, have cash in the bank for 4-6 months of emergencies, and second, get your debts paid off.
If the lump sum will not accomplish both, then put some in your bank account and use the balance to resolve your debts for the lowest amount legally possible.
The worst thing that clients have told us is to have paid all the money toward creditors and then an emergency hits where the person has no money to pay for it. Some clients have told us that this caused them to have to file bankruptcy, what they never thought they would have to do in their life.
Summary: What To Do If You Have Unsecured Debts And Have Access To A Lump Sum
If you do not yet have 4-6 months cash in the bank, then get this set with the lump sum. You will sleep better at night and be able to solve emergencies and surprises when they come up. (Often the reason there are debt issues now is because there was an emergency from something out of your control in the past).
Then, call 1-877-850-3328 for a free consultation and evaluate the options to pay back the lowest legal amount needed so that you can start on the way to a very solid financial future.