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Debt Repair & Relief Debt Articles What Can Do if You have too much Debt?
Debt Repair & Relief Debt Articles What Can Do if You have too much Debt?
| What Can Do if You have too much Debt? |
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| Written by Administrator |
| Friday, 18 July 2008 11:20 |
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1. STOP SPENDING SO MUCH MONEY! Most people get into debt by simply spending too much. 2. TAKE OUT AN EQUITY LOAN AND PAY OFF YOUR DEBTS It sounds really good, getting a cheaper second mortgage to pay off high cost credit cards. Consolidating your credit card debt is another matter. Many people throw in their credit card debt during a refinance so they can deduct the interest on their taxes. The money you save with interest deductions will be more than spent on additional mortgage interest over the life of the loan. Rolling your bills into your mortgage will lower your total monthly expense for reason the interest rate is lower. 4. NEGOTIATE WITH YOUR CREDITORS Most lenders would rather get something than nothing. If your circumstances have changed abruptly (if you’ve lost your job or encounter major health problems for yourself or your family), it’s best to visit your creditors before your accounts are past due. Explain the situation directly, let them know that you do intend to pay the debts but need to work out reduced payments, then make those payments on time. You may also want to place a statement in your file to explain a period of delinquency caused by some unexpected hardship, such as serious illness, a catastrophe, or unemployment, which cut off or drastically reduced your income. If you seem to be honestly trying to pay what you owe and if you have communicated with your creditors, they may be willing to be patient rather than turn your account over for collection. 5. GO THROUGH A DEBT RELIEF ORGANIZATION There are many debt relief/credit counseling organizations to choose from, themost prominent being Consumer Credit Counseling Services (CCCS). We will discuss them in depth in the next chapter. If you’re really over your head in debt and are considering bankruptcy, it may be very helpful to talk to a credit counseling service. 6. FILE BANKRUPTCY Hundreds of bankruptcies take place each week for incredibly small amounts. These consumers are so intimidated by creditors that they flee to bankruptcy, even though bankruptcy can bring financial hardship if you don’t do all the right things for the next ten years. If these same consumers had simply waited and ignored the threatening letters and telephone calls, they would have realized that their creditors were all bark and no bite. The risks of judgments, garnishments, and property seizures must be properly balanced against the likelihood that such drastic collection measures will ever happen. The risk, and the decision to take that risk, is entirely yours. Bankruptcy is the best option for some consumers, but it is much overused and should not be undertaken lightly. |
| Last Updated ( Friday, 18 July 2008 11:26 ) |