You might find it hard to pay your creditors when you are in debt. As such, they might start issuing dunning notices, pressuring you to repay, but you cannot afford it. Are you struggling to pay your bills? Or, do you fear losing your car or home to debt collectors? Do you need credit debt relief? You should know that you aren’t alone.
At some in life, most people experience financial hardships. Whether the trouble results from family or personal illness, overspending, or losing your job, debts can be overwhelming. However, you can overcome the issues, meaning that your financial situation does not have to get worse. Some strategies can help you in coping with debt, as explained below.
Creating a Budget
Doing a realistic evaluation of your income and expenses is the first step in gaining back control of your finances. List all your income sources and then fixed expenses like car loan repayments, insurance premiums, and mortgage repayments. Then, list the variable expenses like clothing, groceries, and entertainment.
Ensure you include expenses that seem insignificant. From this, you can identify the necessary expenditures and track your spending patterns. The objective is to ensure that you can afford the basics like food, health care, education, housing, and housing.
Fortunately, you can find money management and budgeting information online, in bookstores, or public libraries. There are software applications that can help you create a budget, track your expenses, and develop achievable plans for debt repayment.
Dealing with a Debt Collector
When and how a debt collector should contact you is set out in the Federal law; not after 9 p.m. or before 8 a.m., or when you are at work, and the debt collector knows your employer’s dont approve calls at work. They shouldn’t lie or harass you or use unfair practices when collecting a debt. They also should honor your written request to cease any further contact.
Contacting Your Creditors
Ensure you inform your creditors immediately if you can’t afford to make ends meet. Tell the creditors why it is difficult for you. They can offer credit debt relief by helping you create a modified debt repayment plan to lower your monthly payments to manageable levels. Do not wait until the creditors have given up on you and your accounts are turned over to debt collectors.
Managing Your Home and Car Loans
Since your debts may be secured or unsecured, you might have instances where debt is tied to an asset like your home for a mortgage. The creditor might repossess or foreclose the car or your home whenever you default in repayments. In most auto financing agreements, the creditor can repossess the vehicle when you default.
They don’t need any notice. You’ll incur other costs like storage or towing charges to get the car back upon paying the balance; otherwise, the creditor will resell the car. If the default is approaching, you’d better sell the vehicle yourself and repay the debt.
Have you fallen behind or feel you’ll likely fall behind your mortgage? Immediately contact your creditor for credit debt relief to avoid a possible foreclosure. Most lenders are willing to work with debtors if they believe that your situation is temporary and you are working in good faith.
Some creditors might suspend the payments for some time or reduce them. However, you’ll pay an extra amount towards your past-due total when you resume the regular repayments. Others might change the mortgage terms and extend your repayment period to reduce your monthly payments.
Debt Consolidation
You can reduce your cost of debt by consolidating the balances through various mechanisms like balance transfers and HELOCs. Some debt consolidation plans like personal and peer-to-peer loans do not need collateral, while others might require it. However, consolidating your debt has many benefits. Among them, you can approach multiple debts as one, and most people prefer consolidating their debts as a form of credit debt relief.
Debt Relief Services
Do you have a considerable credit card debt, but cannot work out a repayment strategy with your creditors alone? You might want to contact a debt relief service for advice on how you can deal with your debt or even create a repayment plan for your creditors. However, before conducting business with a debt relief service, you should conduct a thorough investigation into complaints filed by other clients or how the debt relief service has performed over the past.
The consumer protection agency near you or the state attorney general can help you find a solid agency with which to work. Click here for more information on what credit debt relief programs you could get from a reputable debt relief company.
Are you considering getting help to deal with your financial situation? Find out what the debt relief service offers, how long it will take you to get the promised results, and how much it will cost you. Never rely on verbal agreements. Have the agency put everything down in writing and thoroughly go through the terms and conditions of the contract.
These services include:
Credit Counseling
You can get advice about managing your debts and finance from reputable and trustworthy credit counseling organizations. They can also offer free workshops and educational materials and help you create a budget. Counselors are trained and certified in debt and money management, budgeting, and consumer credit.
They will discuss your whole financial situation and help you develop a personalized plan for solving your financial problems. Initial counseling sessions typically last for one hour, or there may be follow-up sessions.
Many of the reputable credit counseling agencies are non-profits. They provide their service online, on the phone, or through local offices. Find an agency that offers in-person counseling whenever possible.
Many military bases, housing authorities, universities, branches of the United States Cooperative Extension Services, and credit unions provide non-profit credit counseling. You could also get referrals and information from your family and friends, financial institutions, or a consumer protection agency near you.
However, the phrase “non-profit” does not mean that the services are affordable, free, or legitimate. Some credit counseling agencies charge exorbitant fees that they may hide or urge you to make voluntary contributions that might cause even more debt.
Debt Management Plans (DMP)
The debt-counseling agency may recommend you enroll in a debt management program if your financial woes result from many debts or inability to repay them.
Don’t enlist for these plans until or unless you’ve had your financial situation thoroughly reviewed by a licensed credit counselor who has provided you with customized advice on managing your finances. Although a DMP might be appropriate for you, a reliable credit counseling agency can still help you create a budget and teach you money management skills.
With a DMP, you’re required to deposit money every month with your credit-counseling agency. It uses these finances to pay your unsecured debts per the payment schedule developed by the counselor, your creditors, and yourself. Your creditors might agree to waive some fees or reduce your interest rates.
However, you should check with your creditors to ensure they offer concessions described to you by a credit counselor. In a successful DMP, you must make timely, regular payments, and it might take you at least 48 months to complete your debt management plan. When in a DMP, you might be required not to use or apply for any more credit.
Debt Settlement Programs
For-profit organizations usually offer this credit debt relief program. They negotiate with your creditors to be allowed to make a one-time payment in full to clear your debt. This amount is generally less than the total amount you owe. The debt settlement program asks that you set aside a certain amount of funds per month in savings to make the payment.
These programs might also ask you to stop making further monthly payments to your creditors. However, you should note that debt settlement programs have several risks. Therefore, consult widely before settling for these debt relief programs.
Bankruptcy
You could also file for personal bankruptcy, although this form of credit debt relief has far-reaching and long-lasting consequences. If you follow the rules on bankruptcy, you could receive a reprieve; a court order indicating that you don’t have to pay back certain debts.
You should keep in mind that bankruptcy information (date of filing and date of discharge) remains on your credit report for about ten years and may make it challenging to buy a home, get credit, get life insurance, or sometimes get a job. However, bankruptcy is a legal procedure that offers a fresh start to you if you’ve gotten into financial difficulty and cannot repay what you owe.
Are you having challenges repaying your debt? Paying back what you owe might be challenging, especially if there is a sudden change in your life, like an ailment that prevents you from working or getting discharged from your job. You can use the above methods of coping with debt to navigate the repayment process smoothly.
