What Can I Do About This Crazy World of Interest?

If you’re into DIY, you always have the option to pay off the debt as fast as you can. In a perfect world, this very well may be the best solution. The problem is, it takes money to do that, and a lot of it. Most of us would have done that long ago if we had the money.

Another option is to call up the creditor and explain that you think the interest rate is unreasonably high and try to renegotiate a lower rate. I have seen that happen in a very few instances, but generally, I find that the creditors are very protective of their high interest rates. After all, remember that the high interest rates bring a tremendous amount of money to the creditor, so much so that they are willing to loan money to people who have a history of being unable to pay their bills. In my experience, creditors are usually not willing to renegotiate the interest rate, or the amount of debt for that matter, until well after the debtor has lost all hope of staying on top of his finances and is scrambling to put his life back together.

In Bankruptcy, you may be able to actually change the interest rate of these loans to something much more reasonable, or eliminate the interest or even the debt altogether, depending on the type of loan.

Types of Loans

  • Secured debts—assuming you want to keep the collateral that secures the loan, the interest rate may be changed to just a few points above Prime (Prime being the interest rate that banks charge their best customers).
  • Unsecured debts—some, or all of them may be discharged or wiped out, eliminating both the interest and the actual debt.

If you have enough money and can pay your debts in full, interest might then become payable, but at a much more reasonable rate.