Debt Management Will Save You and Set You Free!

A Credit Article Contributed by Ann Hull

Help, Help, I'm Drowning in Credit - Throw Me a "Debt Management" Life Preserver. . . .

Gasp! Choke! Sputter! Help, help, throw me a debt management life preserver! I'm drowning, drowning, drowning. . . .something like melting, I'm melting, oh what a world, what a world. . . . .Although you may not be the Wicked Witch of the West, Dorothy, or Toto, and although you're not melting-maybe you are drowning, or at least over your head, and frantically treading murky financial waters. You're in real danger. You're in serious debt! You need debt management, in a hurry! So, here's what To Do To Keep From Going Under. . . .

First of all, are your accounts currently being turned over to various debt collectors? If you or someone you know is getting in financial hot water, take a look at the following options: first, realistic budgeting' consider getting credit counseling from a reputable and certified organization; maybe take a look at possible debt consolidation; or in very extreme cases, bankruptcy. Remember that debt negotiation is yet another choice to examine.

Developing a Budget for Debt Management Purposes: Budgeting Helps You with Credit, Debt Management, and Everyday Living!

Budgeting always helps make your money go further. There's plenty of information out there, and some publications, on making an effective budget. Also you can get some assistance in doing so. And-everyone's budget is individually different, although there are some similar expenses for all, like groceries, common household items, such as tissue paper, some groceries, etc. . .

Get in Touch with Your Creditors Right Away: Contact them quickly, if you find you're having trouble making ends meet. And when dealing with Debt Collectors: It's a good idea to research and have an understanding of the Fair Debt Collection Practices Act. That's the federal law that dictates how, where, and when a collector may get in touch with you.

You Must Carefully Manage Your Home and Auto Loans: Your debts are either unsecured or secured, by collateral, like a car or a house. Your unsecured debts are not associated with any asset, and they will include most credit card debt, bills for medical expenses, possibly signature loans, and debts for other kinds of services, such as your newspaper or cable TV.

Cut back on what you don't need, so you can keep your car, your house, etc. Talk with your secured debt creditors, or those who are assisting you with debt management. If you fail to do this, either your house could be foreclosed on, or your creditor could sell a car, out from under you!

So, if you can't work out a reasonable plan with your lenders, call a housing counseling agency, or some other legitimate agencies that deal with Credit Counseling and Debt Management Plans

Credit Counseling exists for those who are not disciplined enough to make a feasible budget and to stay with it, or if you find you can't work out a repayment plan that is good for you, as well as for all your creditors, use a credit counseling organization. A good many of these organizations are nonprofit and exist to help you and other consumers with your financial dilemmas.

Although many credit counselors will offer their services through local offices, the Internet, or by phone, it's a better idea, if possible, to talk with a counselor face-to-face. You'll find that a lot of universities, housing organizations, military bases, credit unions, and branches of the U.S. Cooperative Extension Service will operate nonprofit credit counseling programs, where you can be seen by appointment.

Also, you can be sure that their counselors are both certified and trained in debt management.

Your Credit and Debt Management Plans:

If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Be wary of credit counseling organizations that charge high up-front or monthly fees for enrolling in credit counseling or a DMP.

Debt Consolidation: You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. If you can't make the payments - or if your payments are late - you could lose your home.

Bankruptcy Options - only consider these as a last resort, and you will need an attorney. Attempt to secure legal advice before you file a chapter 13, Wage Earners Plan, or a Chapter 7. If you have a business, you may need to file a Chapter 11, reorganization plan.

Debt Negotiation Programs: Debt negotiation differs greatly from credit counseling and DMPs. The Claims

Debt negotiation firms may claim they're nonprofit. They also may claim that they can arrange for your unsecured debt - typically credit card debt - to be paid off for anywhere from 10 to 50 percent of the balance owed.

The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added.

Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. Only time and a conscientious effort to repay your debts will truly improve your credit report.