Six Options For Managing Debt

By Michele Lerner
Mortgage Credit Problems Columnist

Depending on the level of your debt problems, your solutions may range from a simple budget adjustment to a debt consolidation loan. Most consumers have plenty of options for debt relief.

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Debt relief options

  1. Develop a budget. The only way to start dealing with debt problems is to write down how much you owe each month, including the interest rate and the minimum monthly payment. List your income and track all your spending for a month or two to see if you can handle your obligations. Make a plan for decreasing debt.
  2. Contact your creditors. If you are having trouble paying your bills, call your creditors to see if you can work out a modified payment plan. Being proactive and clear about why you are having difficulty may help you reduce expenses.
  3. Pay your car loan and mortgage first. Make sure you pay for your car and your home before other bills since these are tied to assets that can be foreclosed on or repossessed.
  4. Credit counseling. A reputable non-profit credit counselor can develop a personalized debt relief plan for no or low cost.
  5. Debt management plans. A credit counselor may recommend a debt management plan in which you deposit money and the credit counseling company pays your bills. Ask for an estimate of how long it will take and check with your creditors to make sure they are in agreement with the program.
  6. Debt consolidation loans. Wrap all or most of your debt into one loan, reducing your monthly payments and your interest rate. Evaluate the short-term and long-term benefits of a debt consolidation loan by entering your information on this page.

Beware of debt settlement and credit repair companies that charge you high fees and perhaps damage your finances. A reputable non-profit counseling service won't do that. Find out whether a debt consolidation loan can help by entering your information on this page.


http://www.ftc.gov / http://www.federalreserve.gov/

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