DebtAssistanceClinic.com

If you have debt problems and are in need of debt relief help, there are several steps you can take to relieve debt. It’s important to know that others have the same debt problems as you, and there are ways to get help for your debt and credit problems. The FTC has some debt solutions to reduce your debt and relieve your financial troubles. Some of these things may not be for everyone, so you need to evaluate your financial position before trying these debt relief options:

SELF HELP
Develop a Budget: Before you do anything, it’s important to calculate how much money you (and your significant other) make, and to determine how much your essential bills such as food, mortgage, rent, gas, car payments, and personal loans cost each month. You then need to consider the other important but less urgent costs such as entertainment, clothing, cable and other monthly bills.

Using this information, you should determine how much money you have remaining once the essential bills are all paid. You need to prioritize which expenses need to be paid immediately and which expenses can be put off. Ultimately, the goal should be to earn more than you spend, but you need to know how much you can realistically spend based on your income.

Contact your Creditors: If you are having a difficult time paying your bills, you should contact your creditors immediately to see what can be done to help. The goal of the creditor’s is to make sure you pay as much as you can when you can. It is more than likely that they will work with you to work out a payment program that is fair and reasonable. One of the most important things to keep in mind is to contact your creditors before they give your accounts to debt collectors.

If your account is turned over to a debt collector, keep in mind that you do have rights when dealing with a debt collector. Debt collectors are highly regulated by the Federal Trade Commission, and you should learn your rights if you need to deal with a debt collector.

Manage your Auto and Home Loans: There are two types of debts - secure debts and unsecure debts. A secure debt means the debt is connected to a tangible asset like your car with an auto loan or a house with a home mortgage. Unsecure debt are not tied to tangible assets, and they include credit card debt, medical bills, and other similar types of loans.

With a secure debt, like a car loan, the creditor can usually repossess the asset if you default on the loan. This means the lender can actually repossess your car if you fall behind on the payments. If this happens, you may have to pay the full balance that’s due on the loan - in addition to the costs of repossession. If you are unable to pay off the car loan, the creditor may sell the car. If you are worried that a default may be approaching, it might be advisable to sell the car to pay off the debt. You can avoid the additional costs of a car repossession (storage and towing), and it will also avoid a negative mark on your credit report and credit score.

With home mortgages and home loans, if you fall behind on your mortgage payments, you should contact your creditor immediately to avoid foreclosure. If you are acting in good faith, most lenders are willing to work with people to suspend mortgage payments or temporarily reduce mortgage payments. You will presumably have to catch up with the missed payments, but if you are facing financial troubles, it’s a better alternative than foreclosure. If you are unable to work out a plan, you should contact a housing counseling agency.
CREDIT COUNSELING AND DEBT MANAGEMENT PLANS:

Credit Counseling: For people who might not have enough personal discipline to create a budget, can’t work out a fair payment plan with creditors, or can’t keep track of mounting bills and expenses, working with a credit counselor might be a good option. Many credit counseling agencies are non-profit, and they will work with people in debt to resolve their financial problems. Because even a non profit credit counseling agency may charge fees, it’s important to find a credit counseling agency that is best for each situation. There are important questions to ask before selecting a credit counseling agency.

Debt Management Plans: For people whose financial problems are related to being too deep in debt or being unable to repay debt, a credit counselor may recommend a debt management plan to eliminate debt. Because a DMP isn’t for everyone, it’s important that the debtor and credit counselor thoroughly review the person’s debt problems to create a DMP that will work.

The way a DMP works is that the debtor deposits money with the credit counseling organization each month, and the credit counseling agency uses the deposits to pay off unsecure debts according to a payment schedule agreed upon with the creditors. Some creditors may agree to lower interest rates or waive some fees, but it’s important to check with the creditors to make sure they offer the fee reductions mentioned by the credit counseling agency. Learn more about Debt Management Plans from a credit counseling organization before committing to one

DEBT CONSOLIDATION

It might be possible to lower the cost of credit by consolidating debt through a second mortgage or home equity line of credit (HELOC). These loans do require the borrower to put up a home as collateral, so if payments are late or if they aren’t made, there is a potential that the lender could repossess the home. In addition, the costs of consolidation loans can be significant. Not only does interest have to be made, but the borrow may have to pay points, with each point equal the one percent of the amount borrowed. Consolidation loans may provide tax advantages.

BANKRUPTCY

Bankruptcy is usually considered the last option for someone in debt. The results of declaring bankruptcy can have a long lasting and far reaching impact on the person who declares bankruptcy. When bankruptcy is declared, a court may absolve certain debts from a person. However, the bankruptcy information such as the date of filing and date of discharge will stay on a person’s credit report for 10 years. This can make it extremely difficult to get credit, buy a home or car, purchase an insurance policy, and possibly even find a job.

Bankruptcy does offer certain advantages, but it isn’t something that should be taken lightly. If bankruptcy is the path that makes the most sense, there are things to think about other than just filing for bankruptcy. There are different types of bankruptcy to consider, and there are other things to consider as well.
DEBT NEGOTIATION PLANS

Debt negotiation is much different than credit counseling and debt management plans. Debt negotiation can be risky, and it can have a long term negative impact on a person’s credit report, making it difficult to get credit in the future. There are many regulations regarding debt negotiation plans. More information can be found on the Federal Trade Commission’s website.