Debt Got You Down?

Debt can be a huge drain on your ability to gain any ground in life. There are many different reasons that people go into debt. Maybe the financial climate has hit you hard or maybe you are simply trying to pay back student loans. No matter the cause, if you are in debt your number one goal should be to eliminate it. However, you might want to tackle your debt differently depending on the type of debt and the circumstances of your unique situation. So where are you in your financial game? Are you coming along well but you feel like you need a little help or are you in financial ruin?

For each stage of your financial path and each level of debt there is a solution but first you should evaluate your position. Take a look at this infographic by Consolidated Credit that highlights each league of debt and the possible solutions for them. Find out which category best describes your situations and which solutions might help you tackle debt.

Debt Relief Options

Tips to Deal With Creditor Phone Harassment

harassing phone callsIf your creditor has sold your debt to a 3rd party debt collector, you are undoubtedly going to be contacted by phone. Debt collectors can be ruthless in their efforts to secure the money owed to them, continuously calling and using various threats to do so. Some debtors opt to ignore these harassing phone calls, but that is almost never the best course of action to take, even if the calls are aggressive and uncomfortable. What is the best way to deal with phone harassment about my debts?

Determine if the Debt is Yours

The first thing you have to do is to determine if the debt is genuine. This is an important step for a number of reasons. Firstly, it’s common for the ownership of a debt to switch hands multiple times between creditors and 3rd party debt collectors. This means contact information could get garbled, and you could be getting calls for a debt that doesn’t belong to you. If you’re unsure, you can send a written request for the verifications of the debt. It’s your right to do so.

More seriously, a debt that might not appear to be yours could in fact be an indication that you are the victim of identity theft! If you look into it and find the debt to be legitimately yours, and it isn’t one you incurred yourself, you need to take action immediately to prevent further harm to your credit.

Halt Phone Harassment

If you determine that the debt you are getting calls for is in fact yours, the next step you should take is send a cease and desist letter. By law, debt collectors must honor your request, so it’s worth it to formally send one if your life is being interrupted by constant contact with the agency.

There are two types of cease and desist letters you can send. The first asks the debt collector to cease all communication with you entirely, which many people opt for. The second requests the collectors only contact you through written means, including letters, and in some cases e-mails. If the debt collector do not honor your request, then they are violating the law, and you can report them to the Federal Trade Commission.

This process may seem too good to be true, but it’s not. It’s part of the Fair Debt Collection Practice Act (FDCPA), which was created specifically for protecting the rights of debtors like you. You can read more about the FDCPA here for more information:

Choosing To Ignore Phone Harassment Regarding Your Debt

Still, some people find it best to try and put off dealing with debt collectors. This is often not a wise move. In some states, creditors can take legal action against you. If the courts side with your creditors, they can legally freeze your bank accounts until some payment option is worked out. Furthermore, they can even garnish up to 10% of your wages from each paycheck! The best course of action is to face your debt head on before it ever reaches this point. There are other forms of bill collection harassment protection that you can take, and ignoring the problem is never the right option.

What’s the Best Option for Dealing with Phone Harassment?

Of course the answer to this question relies mostly on your particular circumstances. Often times however, Debt Consolidation can be the best route for debtors having trouble getting out of debt. It’s possible to group all your debts into one big loan with lower monthly payments, and halt those dreadful harassment calls.  I hope that you have not been a victim of phone harassment.

If you hear of anyone that has been a victim ensure you are compassionate towards them as we do not know all the circumstances regarding their situation.

Photo by: Nyataylor

How to recognize the tell-tale signs of debt, and how to get out of it

defeat debtWith so many different ways to borrow money, from credit cards to loans, it is very easy to land yourself in debt without even realising it. Reckless spending, living beyond your means or failing to read the small print isn’t wise, so it’s essential to avoid debt that will be difficult to clear.

If you have credit cards, loans or any other form of borrowing, you should be keeping a close eye on your finances. If you’re in debt, you need to know that you’re in debt and by how much. So many people with debt problems run away from their money problems, refusing to face up to the situation in the vain hope that it will disappear on its own. Needless to say, burying your head in the sand will not do a thing to clear your debt problems. You need to look your money worries square in the face and take decisive action to get yourself out of the red and back on the right track.

Debt might seem like an easy thing to spot, but not if you’re in denial. Here are a few tell-tale signs to look out for:

  • You receive demands for repayment in the mail, or calls from credit card companies or other creditors,  at least once a week
  • You can only afford the minimum monthly repayments on your credit card bill
  • You have no savings – all your money goes towards paying back what you owe
  • You can never quite manage to pay your bills on time – and not simply because of forgetfulness
  • You are near to or over your credit limit on all of your credit cards
  • You’ve been denied when you apply for credit card or other new credit products

How to start tackling your debt problems

Now that you’ve recognised the signs of debt, you need to take action. Clearing debt problems is not something that can be done overnight, and it can seem quite a daunting task. So, where do you start? The first thing to do is to take stock of your financial situation, adding up the full amount of money you owe. This isn’t a pleasant task, but you need to know. The next thing to do is to get together figures for your income, savings and any other payments you have to make each month and take them to a debt advice service. There are many free, unbiased services you can use that will get you started on a debt repayment plan.

Debt Consolidation – Is it right for you?

Debt ConsolidationThere are many different ways to approach dealing with debt problems. For each person, it will be down to their individual circumstances and the amount they owe which path they choose when working to clear their debts.

One option that you hear a lot about is debt consolidation. This is where a number of unsecured debts can be paid off at a stroke by taking out a new, larger loan that will cover all the smaller debts. This is a debt consolidation loan and is one way to manage debt.

Benefits of Debt Consolidation

Debt consolidation can add clarity to your debt situation. Instead of having numerous creditors to pay back different amounts each month, you will have the simplicity of making one monthly payment to the debt management company or other organisation that has financed your consolidation loan.
The debt consolidation loan will often have a lower rate of interest than you have been paying on credit or store cards, and the monthly payment is likely to be lower as the repayment period will be longer. It won’t work out to be cheaper overall, but you’ll feel less pressure, as long as the repayment schedule has been designed to work with your household budget.
The clarity and lack of administrative hassle will no doubt improve your stress levels – and your sleep at night.

Disadvantages of Debt Consolidation

Some people who take out a debt consolidation loan think of it as wiping out their previous debt. This is dangerous territory, because, while it may free up your ability to use your credit cards again, in fact all a consolidation loan does is move debt all into one basket. It is still there for you to pay back, but because you have the freedom to use your cards once you have cleared any debts on them, you may fall into the trap of spending more than you can afford again.

So, is it right for me?

Using a debt consolidation loan will cost you more than just paying off existing debts, but it can give you the breathing space you need to get the debts paid off. As long as you have a strong self-discipline and can avoid the temptation of spending until the debt consolidation loan is paid off, it may be an appropriate solution for you. Always seek independent financial advice before entering into any agreement.

Have you considered debt consolidation?

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Manage Debt Before It Manages You

manage debt

The old saying goes that debt has its way of creeping up on us without us really even knowing it and this post will be about how to manage debt.  Now a days we are so quick to pull out our credit card or debit card to make a purchase.  To manage debt we need to really look close at what we are spending our money on and really track it.

It is important to keep debt at reasonable and manageable levels or we could end up incurring high interest rate charges. Even worse having barely enough money to pay the minimum payments on our credit cards.

Where Do You Turn For Help to Manage Debt?

The first course of action to manage debt is to look into creating a budget to track where your money is going, there are many free budget templates available online that you can use. Finding areas that we are spending frivolously we can explore to find any savings which will help us manage debt. Occasionally there are times when there just are more expenses than revenue that is coming in, maybe we have gone too far off the deep end and we cannot solve our debt by budgeting.

In Comes The Consumer Debt Management Professionals

Now that we have realized that we cannot tackle our debt problem on our own, we are in a situation where we need outside help. It is very hard to ask someone you know for help, especially for debt management help. If you don’t want to ask someone, you can always teach yourself by receiving an accounting associates degree which will help you take control of your finances for good.

If you do not gain control over your debts, there are many things that can be impacted by your negligence. Your debt problems could impact your credit rating, potential job opportunities might vanish, and even your health. It is important to manage your debt before it manages you and it is too late!

Manage Debt: Debt Consolidation or Credit Counseling?

Occasionally debtors will turn to a debt consolidation company thinking that they are the answer to their debt problems.  What typically a debt consolidation company does is they may transfer all your debt to a lower interest rate credit card or maybe tap some of the equity in your home to get money to pay off the consumer debt.  If you close the accounts that you had open in favor of the lower interest rate card you could actually negatively impact your credit report as you are raising your debt to available credit ratio.  If you do take this route keep the other credit lines open just do not use the credit cards.  Make sure that if you do tap your home equity you are not in any risk of default as the last thin you want to do is put your house on the line for your poor debt management choices.

Credit Counseling is another popular option to managing debt.  By taking the credit counseling agency approach they offer various ways to help you including financial management, setting up a budget and debt management plan.  The debt management plan involves the negotiation with the creditors on your behalf to try and gain more favorable terms.  The debtor will then make the monthly plans to the credit counseling agency and they will make the payments to the creditors on behalf of the debtor.

This can typically get you out of debt faster but there can be negative consequences on your credit report.  There will be a notation on your credit report that you are in credit counseling and this will negatively impact your ability to open new lines of credit.  Before taking this route make sure that you know you are dealing with a reputable credit counseling agency and understand your responsibilities as part of the debt management plan.

An  overabundance of debt can wreak havoc on our finances and our credit scores but if you manage debt you can stop it before you spiral out of control, which brings me to another point.  Once you are done with your debt repayment, consider starting up an emergency fund.

Manage Debt Before It Manages You!

Photo by: eric731