Debt Recovery & Relief

• The first step toward paying off your debt is getting a realistic understanding of your current situation - how much money you take in each month; how much you spend; and how much you can save. This basic information will help you formulate a long-term action plan on your own or decide that you need to seek professional assistance. To get started, read these today.

Paying off your debt means cutting your spending immediately. It may also mean talking with creditors, debt collectors, and credit or debt counselors. The following information will help you reach your goal.

You might be surprised how quickly small expenses add up to big savings.

Some of your regular, periodic expenses are luxuries - things like house cleaning, manicures, lawn-care services - do them yourself, or do without. Trade in those luxuries for the big luxury of paying off your debt.

That expensive coffee grabbed in the morning rather than having coffee at home or at work, not ordering expensive drinks at restaurants and going out less - these are things everyone can give up or change that will make a big difference in monthly expenses.

Other items like an expensive car or apartment may take longer for you to downsize, but with planning you can. Making these changes can add up to hundreds of dollars a month or more. This will provide you with money you can use to start making a real difference in paying off your debt.

It is equally important not to take on new debt until you get your finances under control.

Sticking to a budget and contacting your creditors if you have problems making payments are the first steps on the road to dealing with your debt. Sometimes, though, they are only a beginning, and professional assistance may be necessary. Review the information under this section, and if you feel like you may need professional help, you may wish to contact the Agensi Kaunseling dan Pengurusan Kredit (AKPK) by visiting their website at www.akpk.org.my or call their hotline at 1-800-88-2575 (toll free).

When less of your money goes to paying interest on your debt and more of it goes toward paying off the actual debt, you will reach your debt reduction goal sooner.

• Prioritize your debts by interest rate. To minimize the amount of interest you pay, concentrate on paying off the debts that carry the highest interest rates first. Keep all your accounts current by paying at least the monthly minimum due on each one. Focus the additional amount you are able to pay each month on paying off the highest interest rate debts.

Secured debts are tied to an asset, such as a vehicle loan or your mortgage. If you fail to make payments on a secured loan, the lender can take steps to repossess the asset, for example taking back the vehicle or foreclosing on your home.

• Vehicle Loans - Most vehicle loans allow a creditor to repossess your vehicle any time you're in default of your loan. The creditor is not required to notify you before repossessing the vehicle. To recover a vehicle that has been repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, or the creditor can sell it. If you believe you will default on the loan on your vehicle, you may be better off selling it and paying off the loan, avoiding the costs of repossession and the negative mark it will leave on your credit report.
• Home Loans - If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. It could take as little as two or three missed mortgage payments for your lender to initiate foreclosure. Most lenders are willing to work with you if they believe you're acting in good faith and the situation is temporary and correctable. Some lenders may agree to extend the repayment period to reduce the monthly payment. Others may reduce or suspend your payments for a short time and, when you resume regular payments, you may have to pay an additional amount toward the past due payments. Ask whether additional fees would be assessed for these options; if so, calculate how much they will add to the total over the long term.

Unsecured debts are not tied to assets. They include credit card debt, signature loans, medical bills, and debts for other types of services.