Monday, August 31, 2015, AM | Leave Comment
If you are heavily in debt and you think you cannot get out of it without outside help, think again. There are certain steps you can take to reduce the burden of debt on your financial shoulder. You may have trouble paying your bills.
You may be receiving threatening letters as accounts become way past due. Debt collectors may be calling you constantly.
You may be worried about losing your home or car or because of other similar secured loans. Eventually you may be losing your sleep. Even if you are able to sleep, nightmares constantly keep waking you up. In short, your life becomes a living hell.
If you are truly having this problem, the sad part is that you are not alone. Hundreds of thousands if not millions of folks are in the same big boat and are afraid that their financial boat might eventually sink. That would be their financial death resulting in bankruptcy, in turn resulting in the worst credit score they possibly can have.
Lenders will have the hardest time to trust you in paying the loan back if you open your mouth and ask them for another loan. If they do lend you the money, it will be at such exuberantly high interest rate that would force you to think it might not be worth getting the loan. You just got out of one ditch of debt and you are digging another. Your life becomes truly a living hell on this earth.
You may be able to help yourself if you are truly determined to do so. It would need your utmost attention. Instead of opening your mouth and asking for more loan to pay off the existing loan and get yourself in deeper debt shit, here are a few steps you can take to lessen the load on your financial shoulder.
Develop a budget you can follow
You must take control of your financial life. Do a realistic assessment of how much money you take in and how much money you spend. The goal here must be to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.
There are a variety of sources available to you. Visit your local public library and online resources. You don’t have to work with elaborate software or computer-generated spreadsheet and databases. Very few people consistently follow them anyway.
Just work on your saving and spending habits by changing your financial lifestyle and mindset. Follow this simple rule and get into the habit of spend less than you earn.
Contact your creditors directly
The moment you learn that you are having trouble making ends meet and cannot pay your bills, contact your creditors immediately. Tell them the reason why you are unable to pay back and work out a modified plan to pay your monthly installments.
Creditors are not all bad. Granted you may feel they are the anacondas of the financial world and they are out to suffocate you financially, but you may have brought the debt on your shoulder yourself. Think about that. You must wake up yourself before you wake up the creditors.
Don’t wait. Call them. Otherwise, the creditors will turn over your account to debt collectors. That would create more severe headache – a migraine that repeats itself for no apparent reason – on top of the headache you are already experiencing.
Deal with debt collectors
Now that you have procrastinated resulting in your account being in the hands of the debt collectors, firstly what you can do is to know your rights.
The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you.
Wikipedia has described in detail the prohibited conduct of the debt collectors. Read it so you know what they can or cannot do.
Manage your loans
Educate yourself about how secured and unsecured loans work. These are two major kinds of loans. Secured loans usually are tied to an asset, like your car for a car loan, or your house for a mortgage.
If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured loans are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.
In any case, contact your lender immediately to avoid repossessing your car or foreclosure on your house. Most lenders are willing to work with you if they believe you’re acting in good faith. Try to convince them that your situation is temporary. Some lenders may reduce or suspend your payments for a short time.
Like IRS when you don’t fully pay what you owe in taxes, they charge you interest for the time you did not pay. Same with lenders. When you start payment again, they might charge you principal with interest for payments that were suspended.
Contact HUD Approved Housing Counseling Agency
If you and your lender cannot work out a plan, contact a HUD Approved Housing Counseling Agency in your state. Many offer free help to any homeowner who is having trouble making mortgage payments.
In a Nutshell
Because you have decided and are determined to help yourself about your debt, follow the above steps and you would lessen the debt in your financial life. You need a breathing space from your heavy debt.