Debt Management
One of the most important things to remember when dealing with debt is that you are not alone. There are many people out there who are struggling to pay their bills, are being turned over to collections agencies, and are overwhelmed with the stress of financial insecurity. However, there are steps you can take to gain back your life, both personal and financial. There are different methods depending on your level of debt.
Self Help
Many individuals attempting to take control of their financial situations often choose to do so without the assistance of debt-relief services. If you choose to tackle your debt on your own, try following these steps for optimal success:
Create A Budget
Once again, we are going back to basics. Knowing what money is coming in and where that money is going is important in assessing when and how you will be able to pay off your debt. As soon as you take inventory of your monthly income and expenses, you will be able to determine how much money you can dedicate towards paying down your debt and see where you can cut costs elsewhere. Check out our Budgeting & Spending Plans page.
Reach Out
As soon as you find yourself having difficulty making payments, contact your creditor(s) immediately. Keeping them aware of your financial situation will not only prevent them from sending you to collections, but they might be willing to waive some late payment fees as long as you keep them informed.
Know Your Rights
Dealing with debt collectors is a tricky business. However, the law prevents from debt collectors and collections agencies from harassing you. For more information, please click here.
Managing Loans
Secured debts are attached to physical assets, such as houses or cars. If you default on a loan, a creditor is within their rights to repossess the car or home. That can wind up costing you even more in terms of fees. If you continue to fail to make payments, the creditor might even sell your property. It is important that you contact your creditor if you feel you are not going to be able to make payments. They will often work with you if they believe you to be acting in good faith.
Debt Relief Services
As much as we would like to believe that we can handle our financial situation on our own, there are times when even the strongest of us require a little help. If you feel that your debt is getting unmanageable, you might want to employ some experts to assist you:
Credit Counseling
Credit counseling organizations employ certified credit counselors who are trained in debt and money management, consumer credit, and budgeting. These counselors will be able to assess your financial situation and help you create a plan to get out of debt. In addition, credit counseling services offer workshops and information on how to get financially stable.
Debt Management Plans
Depending on the severity of your debt and financial situation, your credit counseling organization may recommend that you enroll in a debt management plan. A debt management plan requires that you pay money to the credit counseling organization, which they then distribute to your unsecured debts (such as credit cards, medical bills, etc.). Creditors and credit counseling agencies sometimes come to an understanding which can result in lower interest rates and the waiving of certain fees.
Debt Settlement
Some creditors or collection agencies offer debt settlement programs that allow you to pay an amount that is less than you owe. This may be a one-time payment, or an agreed upon payment that is to be paid each month.
Consolidation
Sometimes, the reason individuals struggle to make ends meet is due to the fact that they have so many bills to pay each month. Having a large number of bills to pay makes it almost impossible to stretch your dollar far enough to cover all your bases.
Consolidation companies specialize in organizing your debt so you can make one, low monthly payment. This way, a piece of your payment goes to each of your debts. However, there are some risks. Check out our Relief Risks page for more information.
While debt relief services, consolidation, and bankruptcy are all valid courses of
action to take when it comes to debt, there are risks associated with each method.
For more information on the these relief risks, please click here.