How to get out of my debt trap situation ? Please give some suggestions

POSTED BY swarnabg0 ON June 9, 2014 4:42 pm ONE COMMENT

Warm Greetings to all JI people!

I’m facing a unique crisis in my life. My father has gotten into a debt trap. He is retired and his source of income is pension and earnings from consultancy. Being a Cost Accountant, he still earns 30-40K on an average every month, some months being dry and the others being rewarding. However, his earnings mostly go into paying interests of loans. All the loans are from non-banking private money lenders. Total loans are to the extent of 8 Lakhs. Total interest payment every month is 25K. This is only the interest and the principal remains the same. It’s a huge drain on our resources.

I earn 33K per month and I’m saving the most for my wife’s delivery which is due in August. Hence I’m finding it difficult to contribute towards the debt repayment. Can you suggest any way to get out of this debt trap?

Let me inform you that we have no gold jewellery and no property apart from the one we are living in. Can we take a loan against the property? My father can’t take any bank loan as he is 73 yrs old. Will it be a wise decision for me to take on such a huge loan as I have more responsibilities coming up? I am ready to take on my father’s debts but at the same time scared of my future since I’m only 32 yrs old.

Please advise me on the right course of action. I’m feeling very helpless.

Thanks in advance,


One reply on this article “How to get out of my debt trap situation ? Please give some suggestions”

  1. Hi Swarnab

    I hope you are paying around 45% interest on the loans which you have on a yearly basis . Its almost like credit card interest, but its very much expected because the risk lenders are taking is like credit card only.

    Coming to the point, you need to first understand that unless you take a huge step , things will not change. So now the best thing you can do here is somehow get rid of this 8 lacs loan because the interest part is quite huge. So the best I can suggest is that you take another loan on your property and pay off the full 8 lacs loan , and then pay the interest of the secured loan only and it will be quite less compared to your current loan.

    I think if you would have done this long back, by now you might have completed a good part of payment back .

    Anyways, instead of your father paying 25k per month to private lenders , the same money can be diverted to the bank loan and it would be close to 8-10k only per month . Which means that if you plan things properly, you could get out of this in 4-5 yrs .

    I would say this is the best short cut 🙂 you have ..


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