| Debt Relief Tips |
| By Credit Federal |
Published
07/4/2008
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Debt Help
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Debt Relief Steps Simplified
Simplified steps to get your personal finances in order so you can get out of debt.
Figure out how much you owe by getting all your bills and debts together. Make two columns of expenses (necessary and unnecessary). Debt such as a mortgage or rent and an auto loan are certainly considered necessary, as is utility and grocery costs. Bills like entertainment and dining out are not necessary.
Order a free credit report copy (if you haven't already ordered your annual free copy; otherwise, purchase a copy). Examine it closely for debt you may have forgotten about, or debt which is fraudulent or an error so you can fix it.
Add your total debt (necessary expenses plus unnecessary bills), and subtract that total from your monthly income.
If you owe more than your income, don't fret yet. Next, subtract only your necessary debt from your income. If you still owe more than your income, now worry. You need to take immediate action to stop increasing expenses and work towards getting out of debt. Stop charging and cease getting any new loans, and instead focus on paying back the outstanding credit you already have. If you cannot meet the monthly repayment demands set by your creditors, call them and discuss a new repayment plan.
If you are uncomfortable dealing directly with creditors, get professional help. Your city/town may have a nonprofit credit counseling agency, or you can locate one online. Be sure to consider all your options before deciding on one plan.
If you opt for a credit counselor, check the counselor's or agency's standing with the Better Business Bureaus (BBB). As for debt negotiation (debt settlement) companies, although they can reduce your debt the lowest and the quickest, you may want to consider them last because these types of chargeoffs could make your credit report score worse than it already is, and could more seriously impact your ability to get credit for several years.
If you're already behind on bills, you likely have harrassing debt collectors calling your home phone. After 90 days, many creditors hire third-party debt collectors to get you to pay what you owe. Learn how to deal with debt collectors and know your rights as well as the debt collection statute of limitations for your state.
And if you don't think you owe a debt, make the collector prove it by sending a debt validation request.
Apply for credit counseling or debt negotiation.
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