How to Move Long-Term Liabilities to Short-Term Liabilities

Long-term debt is a difficult burden to carry. The reason many carry debt for long periods of time is the inability to satisfy the obligation short term. As your financial situation improves, you may find it cost-effective to transfer long-term liabilities to short-term ones. Short-term liabilities are those payable in one year or less. While your payments will be higher, you will save on interest long term. More importantly, you will be closer to paying off your debt and attaining financial freedom.

Instructions

1

Reduce the principal owed on the liabilities. Run an amortization schedule (see Resource), or request one from the creditor. Pay down the principal to the point where the loan will be paid off in one year or less.

2

Modify the term of the liability through the creditor. Meet with a representative and discuss repayment options. Find out what it will cost to reduce the term to one year or less. Follow the lender's procedure, and execute any required documents.

3

Pay the liability until it naturally amortizes to the point where only one year or less remains. This is the longest method to reduce a long-term liability to a short-term one.