Be Responsible With Debt.

Are paying bills getting harder? Getting notices from creditors? Are accounts going to debt collectors? Is losing your home or car a constant worry?

Don’t feel alone. Many face financial crises at some point in their lives. Whether it is caused by personal or family illness, job loss, or simple overspending, it can seem overwhelming. Often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.

If you are in financial hot water, consider…

• realistic budgeting,
• credit counseling from a reputable organization,
• debt consolidation, or
• bankruptcy.

Which works best for you? It depends on your debt level, your discipline, and your future prospects.

Do-It-Yourself.

You need to take control of your finances. First, do a realistic assessment of your income and your expenses. List income from all your sources. Next, list your “fixed” expenses. Fixed expenses are the same each month, like your mortgage payment or rent, car payment, and child care. List expenses that vary. Entertainment, recreation, and clothing are expenses that vary month to month.

Write down all your expenses. Include those that seem insignificant. This helps track your spending patterns, identify your necessary expenses, and prioritize the rest. Your goal is to have enough for the basics: housing, food, health care, education, and insurance.

The public library, bookstores, and of course, the web have information about budget and money management techniques. Software programs can help you develop and maintain a budget, balance your checkbook, create saving plans, and pay down your debt.

Contacting Creditors.

Immediately contact creditors when you have trouble making ends meet. Explain your situation and try to work out a payment plan to reduce your payments to a manageable level. Don’t wait for accounts to reach a debt collector. At that point, creditors have given up on you.

Dealing with Debt Collectors.

The Fair Debt Collection Practices Act dictates how and when debt collectors contact you. Debt collectors cannot call before 8 a.m. or after 9 p.m. They cannot call you at work if the collector knows your employer doesn’t allow calls. Collectors may not harass, lie, or use unfair practices to collect a debt. They must honor a written request from you to stop further contact.

Credit Counselors.

If you cannot create a working budget and stick to it, cannot get a repayment plan with creditors, or cannot track mounting bills, consider a credit counseling organization. Many credit counseling organizations are nonprofit. They help you solve your financial problems.

Just because an organization says “nonprofit” is no guarantee services are free, affordable, or even legitimate. For some credit counseling organizations, they charge high and/or hidden fees, or pressure you for large “voluntary” contributions which cause more debt.

Most credit counselors use local offices, the web, or telephone to offer services. If possible, get in-person counseling. Many universities, housing authorities, credit unions, military bases, and branches of the U.S. Cooperative Extension Service offer non-profit credit counseling programs. Your friends and family, financial institution, or local consumer protection agency may provide information and referrals.

Credit counseling organizations, that are reputable, can…

• advise you on money and debt management,
• help you develop a budget, and
• offer free educational materials and workshops.

They have certified and trained counselors in consumer credit, money and debt management, and budgeting. Counselors cover your entire financial situation with you. They help develop a personal plan to solve your financial problems. The first counseling session lasts about an hour, with an offer for additional sessions.

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