I touched on an idea in my last post that I thought I would bring up. Some of you slayers might be in real deep water when it comes to your finances. You might have extremely high credit card debt with outrageous interest rates, car loans and variety of other expenses. The thought might have crossed your mind to hit the reset button and file for bankruptcy. Well there’s an alternative and it’s a lot like a Transmorp Spell.
Did you ever play WarCraft II? If you didn’t, WarCraft II was a real time strategy game where you built armies to concur your opponents. One of the characters you could enlist in your army was a wizard, and one of his spells was Transmorph. The wizard could turn any opponent unit into a sheep. If you had a dragon flying into an enemy’s base and they had a wizard, you could potentially see your dragon turn into a mass of wooly mess instantly (For the record, I hate you Mike … I really, really hate you for all the dragons and griffins that you turned…I’m not holding a grudge all this years later. Not at all.)
You also have the potential to do that with your debts. The best way to go about it is called “Debt Restructuring” . It’s pretty simple. You call your creditor, tell them that you are over your head in bills and you can’t meet your obligation. Then ask if your creditor offers a restructuring plan. In today’s economy, restructuring debt has become much more prevalent (much to the chagrin of the banks and credit companies.)
Restructuring is pretty straight forward. Let’s say you have a credit card debt of $20,000 gold pieces at an interest rate of 20%. In this scenario you are paying a ton to the interest of the credit card and praying you can put more down on the principal. When you call your CC company and ask them to restructure the debt, they change the amount of interest owed and close the credit card out. Instead of paying 20%, rates can be negotiated down to 5% or lower (POOF! Debt transmophed into a sheep)
In today’s economy, banks are more willing to settle debts through restructuring rather then sending your account to collections and hoping to get their money back. Creditors have realized that they have a better chance of getting paid if they work with their debtors. There are stings attached, there are always strings attached when you’re combating the Evil Debt Overlord.
For starters, you’re gonna have to prepare to fight for the restructuring. You might need proof that you can’t pay your bills on time, and you might need to plead with your creditor to allow a modification. From your creditor’s perspective, if they can make 18% from you then that’s what they are going to do. You will need to explain to them that making 18% from a zero dollar payments equals zero profit.
Restructuring hits your credit report and lowers your credit score. It’s kinda bullshit if you ask me, but dems the breaks. By modifying your debt your credit card company will report the action to the 3 major credit score reporting companies and it will take an adverse effect on your score. Unfortunately, that is not the only hit your credit score will receive! There is also the matter of how your score is calculated.
A large part of your score is determined by how much available credit you have vs. how much debt you have. By restructuring you will have closed out the available credit you have and turned the balance into straight debt. In that instance your debt load will be much greater then your available credit and your score will drop. Both of these issues are kinda mute if you a) have a low credit score to begin with and/or b) don’t know how you’re going to make the rent or mortgage payment.
Remember that restructuring is a second to last resort. It’s like trying one last peace talk before you engage in a nuclear war (bankruptcy). Before restructuring I urge you to try the Debt Slayer Game first. It’s completely free! If that doesn’t work then head over to the Advanced Tactics Course and see if that can’t help you. Also, you can always leave a comment or email me for advice. If all else fails, Transmorph your debts.
Good luck young slayers!