If you’re deeper in debt than you can handle and are considering bankruptcy, don’t give up just yet. Most of the time, debt management credit counseling can help.
What Debt Management Credit Counseling Does:
Debt counseling firms work with you to reduce and consolidate debt. Usually, the company contacts your creditors and attempts to work out some sort of agreement. You pay the firm one monthly sum, which they use to pay your creditors, according. These companies will also work with you to create a realistic budget, improve your spending strategies, and improve your credit rating. Often times, simply signing up will improve your credit, since anyone who looks at your credit can see that you are working hard to reduce your debt.
Who Debt Management Credit Counseling Can Help:
It is most specifically for people who are in such deep debt that they are feeling hopeless and even considering bankruptcy; but it can help prevent people from ever reaching that stage. Usually, these firms are willing to help anyone who is employed.
Why Debt Management Credit Counseling is Better Than Bankruptcy:
A bankruptcy seriously damages your credit. It stays on your record for up to ten years, and besides that, it is not the fix-all financial solution that many people think it is. When you file for bankruptcy, some of your assets will be liquidated and distributed among your creditors, and there are some types of debt you will have to pay back, no matter what. Bankruptcy in this case is just a way to create a new payment plan. It will also create a new payment plan for you, and get your creditors to leave you alone. But instead of irreparably harming your credit, it actually improves your credit.
Getting Out of Debt, and How to Stay There:
Although there are some exceptions, getting seriously into debt is usually a result of bad spending habits. Sometimes, an unexpected medical emergency may arise, you may lose your job, or you may encounter another unpreventable catastrophe; even then, changing your spending habits is necessary. There’s no point in obtaining debt management counseling only to put yourself in the same debt situation again shortly thereafter, so we’ve put together a list of things you can do (or avoid doing) in order to prevent history from repeating itself.
- Shrink your waistline, fatten your wallet. Cut down on eating out. These savings will add up drastically over time. You should cut eating out to once a week or less. If you won’t be home during lunchtime (most of us aren’t) pack a lunch. When you’re pressed for time, simply make a sandwich and fill a water bottle.
- 2When you go shopping, if you find an item you want, put it on hold for the evening and come back the next day if you still have to have it. This way, you can avoid impulse buying without missing out on great purchases.
- If you can avoid it, don’t carry a balance on your credit card! Interest adds up. Use a debit card if you can’t remember to pay your bill.
- Create a realistic budget that takes into account how much you make, necessary spending such as bills, and leaves room for emergencies.
- Distinguish between wants and needs. Cable TV is not a necessity. Golfing weekly is not a necessity. This is not to say that you cannot have these things, but they should go lower on your priorities list than paying your bills or buying groceries; and they are not worth going into debt for.
Monitor your spending carefully, and stick to your budget. Although debt management credit counseling is always available to help you get out of a hard situation, we hope that when you get out of debt, you will stay out, and never need the services of debt management credit counseling again.
By Riannon Cutler