If you have piled up debts that just make your head buzz and your budget is so restricted, you probably feel like only a miracle can get you out of your misery. The miracle you may desire to have can be in the different ways listed below to reduce your monthly payments. You need to start up and work your way to the bottom. One of these strategies will help you to get your monthly payments to a manageable standpoint.

Negotiate with your creditors

You have to ask your creditors for a break. To do this, you need to use your current billing statements and your credit report to formulate a list of your creditor’s and your lender’s, which you will then calculate the debt you owe to each creditor. Once you have that figured out, compute the amount you can make to each creditor, call them and inform them that you can manage to pay a certain amount.

You can have a hardship plan from your credit card to lower your interest rate for some time or lower your payments. If you find that the customer representative is unwilling to lean on our side, avoid arguing, simply talk to the supervisor and table your request. If there is an agreement, have it in writing on a company letterhead before you start making payments for debt reduction.

Prepayment

You can save money on interest if you prepay. If you pay larger sums of cash than you would otherwise, you will reduce the amount you owe. If you divide the remaining amount with the number of months that you need to complete the loan, you will have lower payments on a monthly basis. If you put some money like bonuses, you will reduce your payments. Before you get to this level, ensure that your loan does not include a penalty on the prepayment that will take effect if you decide to make the loan repayment much earlier.

Extend the payment time line

Lenders can reduce the monthly payments and extend the repayment time. This means that you are going to pay more interest if you don’t refinance. On the other hand, it creates an opportunity to invest the money you save or spend it. If you place investments that give you better returns than your loan’s interest rate, it will cover your interest on the loan and even leave you with some extra cash.

Transfer Balances

A good credit score allows you to balance your transfer lower interest rate credit card compared to other credit cards. There are instances where you can get very low introductory interest rates, and pay off your monthly payments interest free, thanks to the introductory period.

Consolidate

You can get a low monthly payment for your debt reduction if you combine your home equity loan or debt consolidation with your debt. Make an average of the interest rates that are on your existing debt and find a loan that is easier to pay because of its low interest rate compared to your average.

If you get a loan, use it for debt reduction, and plan on making one loan payment. You can use a home equity loan, a personal loan, or a cash-out refinance to consolidate your debt, instead of banking on debt consolidation loans.

Take caution when you are getting a loan that extends for a long time with an interest in making your payments low. You might end up paying even more interest over the course of the loan repayment period.

File for bankruptcy

Occasions happen when your debt cannot be paid by lowering your monthly payments. When this happens, you should consider filing for bankruptcy. New bankruptcy laws expect individuals to undergo consumer credit counselling and to submit an income-debt comparison to avoid abusing bankruptcy.

Chapter 7 will allow for a complete wipe out of some debts, while Chapter 13 will form a loan repayment plan.

Look for credit counselling

If you want to negotiate lower payments and interest rates, then you need to outsource the services of a consumer credit counsellor. If you enroll in a DMP or a counsellor’s debt management plan, you will reduce your monthly payments to help in your path to debt reduction. You can also be equipped with money management skills by your credit counsellor.

Ensure that you go to a reputable credit counsellor and avoid confusing them with companies that settle debts because they will help you to reduce your monthly payments, but they will worsen your credit in the long run.