In 2019, more than 6 % of the Swiss population is in a over-indebtedness. 80 % of them began to accumulate debts before the age of 25. In addition, the situation can quickly become a vicious circle because the debtor goes into debt to pay off his previous debts. Here are 7 effective ways to pay off debt.
1. Make an assessment of the situation
Before repaying your debts, you must first assess the extent of them. This assessment will help you find an effective solution to the problem. The sources and beginnings of the latter are the first points to address. Your money problems may be related to your lack of personal finance management knowledge or to your lack of resources. In any case, this assessment will be the most important step.
Many debtors feel ashamed of their debts to society. Thus, they shut themselves up and do not dare to talk about it to those around them. However, it is possible to call on a cantonal council body. In fact, each canton has a service reserved for this type of situation.
2. Call a professional
A professional can help you set up a debt plan that lasts for an average of 36 months. He will start by doing an analysis of your financial situation. Your analysis that you will have done beforehand will be of great help to him because you are the only one who knows the source of the problem and your real situation. This will also allow him to find the solutions adapted to your situation.
He can then request payment facilities. The latter concern debts which do not present a high interest rate and the amount of which is also limited to a reasonable sum. The repayment plan will thus be made over a maximum of 36 months.
Your advisor can also negotiate with your creditors asking them to waive the interest. Obviously, many factors will come into account in the negotiations such as meeting deadlines and the amount of monthly payments.
In the event of tax debts, he can also discuss with the Tax Office to ask them for payment facilities for the reimbursement of your taxes.
3. Consolidate your debts
If you have several creditors, it is very important consolidate your debts. This allows you to make a monthly repayment from your bank and improve your relationship with your creditors. The principle of consolidation is simple: you take out a loan from your bank in order to repay all your debts; thus, you will only have to repay the loan monthly.
The advantage of consolidation is the possibility of benefiting from a relatively low rate which will be of great help to you. As it is a loan, you will need to present a credit history to show your repayment capacity and will not be able to incur any other debts during the payment period.
4. Control your budget
Controlling your budget is the key to good financial health. Your advisor can give you several tips to control your budget. Either way, the first step is to live below your means. For this you will need to earn more than what you spend. Of course, you can always put a little money aside, but since the monthly payment for your debt is already part of your expenses, you will have to prioritize it. Thus, you will adjust your lifestyle with the remaining sum and you will have to avoid incurring further debts.
The advisor can also eliminate other expenses such as an insurance plan or leasing. The goal is to reduce your monthly expenses in order to repay your debts without cutting your food.
5. Partial forgiveness of debts
The partial remission of debts is also called extra-judicial or judicial composition with remission (LP art.333 and SS). It is a legal act that must be signed by both parties. It mainly concerns debtors who have a high monthly income, but whose debt cannot be settled for 3 years under penalty of having too high monthly payments.
The objective is to liquidate your debts for 36 months and to offer a large sum to your creditor in order to repay it. The creditor will thus renounce the debt (or part).
6. Debt payment plan
The debt payment plan is also called extra judicial composition without remission. This plan allows the debtor to repay his debts in 3 years. It is still necessary to take into account the fact that each creditor must benefit from the same treatment. So, it is possible to do debt consolidation with this solution. It is therefore obvious that it is only suitable for debtors who have the means to repay creditors in 36 months.
With this solution, you have to prepare a payment plan spread over 3 years. It is therefore necessary to inform the creditors of the expected deadlines. Negotiation may be necessary if certain creditors request priority.
7. Declare bankruptcy
If the debtor ensures that he will no longer be able to pay his debts and that no negotiations with the creditors have been able to succeed. He will thus be able to appear before a judge to request a personal bankruptcy according to article 191 on the federal law on the pursuit of debts and bankruptcy. He must also prove that no solution is within his reach to repay his debts. However, he will have to make sure to pay all the costs relating to the proceedings. He will no longer be able to apply for a loan and these valuable goods can be seized. We will speak of a situation in the act of default of goods.
In conclusion :
Many solutions are at your fingertips to repay your debts. Each solution will depend on the nature and extent of these. They may also require the intervention of a third party who will allow you to take note of all the solutions available to you and to choose the one most suited to your situation. In addition to these, Lica offers you a consolidation of your debts under very advantageous conditions. Make your request, receive your financing and an additional cashback of up to CHF 5,000.-.
