Debt

The sooner you admit to yourself that you have a serious debt, the sooner will you be able to do something about it. Continuing with your habits that caused your debt in the first place, will do you no good. Stop it immediately and start thinking what can be done about it.

If your financial issues cause you anxiety, depression or insomnia, deal with them as quickly as possible so they don't prevent you from getting your finances in order. Check solutions for anxiety, depression, and insomnia.

Make sure you even know how much you owe, to whom, and what is the interest rate of a certain loan, credit debt or anything else. When you have a clear picture of all your debts, it will be easier for you to decide your next step.

Make a list everything you spend your money on. Food, clothing, going out, subscription, utilities, rent, everything. It will serve as a reminder that you can't continue like this, that your lifestyle is not synchronised with your earnings, and also as a tool to determine what expenses are not really that necessary.

DMP can be a great solution for you if you don't know how to deal with your debt. When you enroll in DMP, you receive free education, repayment plan, budgeting, intermediation between you and your creditors, and many other things. Check if you are eligible for DMP at credit.org.

Assess all your income and expenses. Hopefully, you will have something left after you pay for food, rent, bills, and any other expenses you cannot avoid. Everything that's left should go to debt repayment. When you know how much money you can use every month to repay your debt, you will also know how long will it take you to get rid of it and when can you start repaying your other debts, if you have them. This is good for you to know. And for your creditors as well.

If you are a compulsive debtor, a person who can't stop spending money it doesn't have, you might consider Debtors Anonymous. It's a 12-step program in which you will learn how to control your finances and develop more reasonable spending habits. For more information, visit debtorsanonymous.org.

Managing a debt can be an overwhelming experience. Your whole lifestyle has to significantly change for the next several months, or even years. If you don't have a clear goal in mind, your discipline might not be strong enough to sustain those changes as long as needed.

Start with a small goal you can easily achieve. And then another. And another. And so on. This will give you a sense of progress. As your debt decreases, your confidence and happiness will increase.

You might think this doesn't need to be stated. But surprisingly, lots of people start paying off smallest debts first, regardless of the interest rate. They feel that a psychological effect of clearing your small debts in a short amount of time will help them stay on track with their debt management.

While this argument has a certain merit, you should not ignore the interest rate. You should not focus on your $500 dollar debt with 6% interest rate while your $10.000 debt with 10% interest rate keeps piling up interests. Always pay the one that has the highest interest rate, no matter how big or small it is.

For solutions how to cut down on your expenses, check solutions for saving money.

Consider replacing everything you have with a cheaper alternative. That includes everything:

• house/apartment
• car
• electronic devices
• furniture
• clothes

For solutions how to generate extra income check No money problem.

Every time you decrease your total debt for $1000 (or any other amount you pick) reward yourself with a treat. It will make you feel good and give you an incentive for further debt decrease. Just make sure it's not something that will cause you even more financial issues.

You got some money you didn't expect as a birthday gift, work bonus, tax return, etc. Don't squander it on something unnecessary. I know it's tempting to use it on something else since this money is not a part of your repayment plan, but remember that your goal is to get rid of your debt as soon as possible. So stay disciplined and use this money to reduce your debt.

Depending on how long have you been with a certain bank or credit company, and how good of a client you've been, you might be able to lower your interest rate simply by asking your bank or credit card company for a lower interest rate.

There is usually a free phone number you can try or you can go to your bank or credit card company personally. If at first you don't succeed, don't give up. Ask to speak to a manager and explain your situation. Again, if you've been a good client so far, they just might lower your interest rate for a couple of percents.

To prevent your debt growing out of control, ask your bank or credit card company to freeze your interest rate and charges for a certain amount of time. The longer, the better. Explain to them that you are not able to pay your debt at the moment but after a certain period of time, you will be. If you have been a long-term client who never had any problems so far, they just might freeze your interest rate to make you happy.

Always pay more than a minimum when paying off your credit card debt. Paying just a bare minimum will get you nowhere. It's throwing money away since, depending on how much you owe, your debt will stay the same, or even grow due to interests. Ideally, you should pay your credit card balance in full every month. But if that's not possible for you, try to get as close as possible to it.

If asking your bank to lower your interest rate didn't work, you might consider switching to another bank that offers better terms and lower interest rate on your overdraft. Shop around and see what other banks are offering. Just make sure there are no hidden fees.

If your credit card company refuses to lower or freeze your interests, it might be time to make a balance transfer to another credit card company. Carefully examine offers from other companies to see if it's worth it. Most balance transfers require a transfer fee upfront. Make sure you can afford it. 

Try to pay for everything with cash to prevent further debt and interests. Use credit cards only when you have no other choice. If you are afraid you won't be able to resist buying unnecessary stuff, cut up your credit card. 

Depending on how long have you been with a certain bank and how good of a client you've been, you could ask your bank to waive overdraft fees.

There is usually a free phone number you can try or you can go to your bank personally. If at first you don't succeed, don't give up. Ask to speak to a manager and explain your situation. Again, if you've been a good client so far, there is a high possibility that your bank will waive overdraft fees.

If tackling your debt all on your own proves too difficult for you, you might want to try talking to a professional. A credit counselor can help you with managing your debt, setting up your budget, and providing you with various options. 

To find a respectable counseling agency, go to justice.gov.

Instead of paying your mortgage once a month, you could try paying half of it every two weeks. That way, not only will you save on interests over the time, but you will also be able to net 13 full payments per year instead of 12, which will further save you on interests and decrease the time you need to pay off your mortgage.

Talk to your bank and see if such an arrangement can be done.

Always take care of your credit score. No matter how bad your financial situation is, if possible, try not to do anything that will destroy your credit score. You will need it for managing your debt and for any loans and credits you might take in the future. For maintaining your credit score, check credit score solutions.

Debt consolidation means taking one big loan, with an interest rate as low as possible, to repay all your other loans. That way you could save lots of money due to lower interest rate and go from having to deal with several creditors, to dealing with only one creditor. Talk to you credit counselor to see if this is the best option for you.

Debt settlement is one of the last options for getting rid of your debt as it will seriously damage your credit score. But, sometimes it is the best option for you. Basically, your creditors and you agree that you will pay a certain percentage of your debt and it will count as if you repaid your entire debt.

Before using this option, talk to your credit counselor to see if this is the best option for you.

It's not the most pleasant thing to do, but it certainly beats getting a high-interest loan from a bank or credit card company. Explain your situation to your friends and family and if needed, make an official agreement, with notary public present, so the person who lends you the money knows you are serious about repaying your debt to them. If needed, offer a collateral.

While repaying your debts should be a priority, spare a certain amount (as much as you can) for your emergency fund. You never know when will you need it for medical bills or some other situation that requires lots of money right away. Otherwise, you will further increase your debt.

This book will explain all you need to know about managing your debt. You can order it at Amazon.

Make sure that you understand what are you up against. Examine your rights and responsibilities as a loan user, available repayment options, factors that determine if you are eligible for forgiveness of a debt, consequences if you default on your payments, etc.

Realize that failing to repay your student loan will have terrible consequences on your credit score. And you need to have a great credit score for any future loans you might take.

 With a standard repayment plan, you will be able to pay off your entire student loan in 10 years. Every month you pay the same amount until your debt is fully repaid. Suitable for students with a steady income. One of the most efficient way to pay off your debt.

A graduated repayment plan starts with smaller monthly payments that increase over time. It's perfect for you if you current salary is too low for a standard repayment plan, but you expect to get periodic promotions and salary increase. With this plan, you will also be able to repay your student loan in 10 years.

This plan should only be used if you can't afford any other plan. Your monthly payments will be small, but overall, you will pay a much higher amount due to interest. With this plan, you expect to fully repay your student loan in 25 years.

Depending on your financial situation, you might be eligible for various income-based repayment plans.

• Revised Pay As You Earn Repayment Plan (REPAYE Plan)
• Pay As You Earn Repayment Plan (PAYE Plan)
• Income-Based Repayment Plan (IBR Plan)
• Income-Contingent Repayment Plan (ICR Plan)

For more info about those repayment plans, visit studentaid.ed.gov.

If your financial situation becomes so bad you are no longer able to repay your student loan, you might be eligible for deferment or a forbearance of your payment. However, know that your interest will still accumulate during this period so use this only if you have no other choice. But anything is better than defaulting on your payments.

To see whether you qualify for deferment of forbearance, visit studentaid.ed.gov

If at all possible, try to target the principal with extra money, along with your usual monthly payments. This will allow you to repay your debt sooner, and since you are paying off only principal and not the interest, it will make your payments more efficient and save ou money over time.

Talk to your loan servicer about this option.

Find out if you are eligible for a forgiveness of your student loan. For more information about this, visit studentaid.ed.gov.

It's a long shot, but depending on what firm you are working for, there might be some solutions to explore regarding your student loan. Some firms offer annual contributions for your debt repayment. Other might offer loans with low interest, or no interest at all. Talk to your employer to see if your firm can help in any way.

One of the many benefits of a government student loan is the wide array of repayment possibilities, deferment options, and in some cases, even forgiveness of your student loan. You lose all those perks if you consolidate with a private lender. So whatever you do, do not switch to a private lender in an attempt to clear your debt.

The best way to prevent getting into debt is to always have some money saved for emergencies. You never know when you'll end up in a situation that will require hundreds or thousands of dollars to be paid instantly. If you don't have anything save, you will have to take a loan, or go into overdraft, which will cause your further expenses you could have avoided.

Having a credit card can save you when you are out of cash and ATM is nowhere to be seen. But they can also ruin you financially if you are not careful. The golden rule when using credit cards: Never charge products or services you can't afford to pay the following month.

No matter how tempting it is, resist it if you don't want to get into debt. Once you get into that hole, it's very hard to come out of it.

No matter how much stuff you buy, it will never be enough for you to be happy. There is always something new you could buy. And if you can't afford it, you'll get into debt. So what you need to realize, is that you can't buy happiness. No one managed that. Stop envying other people on their possessions and competing with them and try to achieve happiness without being dependant on stuff you can't afford.

If you miss your credit card payment, even once, you will most likely have to pay late fee charges. If you do it multiple times, your interest might go up and your credit score will suffer. In other words, you'll get into fi slight financial troubles that could easily snowball to major financial troubles. So try to avoid bein late with your payments.

Whenever you get a bill for your credit card, try to pay all of it. If you make only a minimum or partial payment, the rest will transfer to the following billing period and you will, in fact, be in debt and will have to pay interest. And to stay out of debt, you should avoid any situation that will cause you to pay interest.

When you consider interest and fees connected to cash advance, you'll realize it's one of the most expensive ways to get some money. So, naturally, you should refrain from using it unless you really have no other choice. If you use a cash advance from one credit card to be able to pay another credit card, you are already in trouble and should immediately start changing your spending habits and looking for ways to get out of debt.

Transferring your balance from one credit card to another can be a good thing if that other credit card offers lower interest rate. It can help you pay off your debt faster. But only if you are aggressive about it.

Remember there are fees involved for every balance transfer. And after a certain period of time, your new credit card will most likely have higher interest than your old credit card, making your debt harder to pay off. And then you will most likely be forced to make another balance transfer and so on, and so on. Only do a balance transfer if you plan to pay off your debt during your new credit card's "tease period" with lower interest.

If you can't find your credit card, or you suspect it might be stolen, immediately report it to your bank or credit card company so you don't end up paying for products and services you didn't buy. If you don't report it on time, it will be almost impossible for you to dispute charges made on your credit card.

Carefully examine every document before you sign it. Take all the time you need. Ask a friend or a relative to explain it to you if needed. Check if there are hidden fees, what are the penalties for missed payments, what are your options if you can no longer repay your debt, etc. Don't just rush through it. Read it thoroughly.

If at all possible, always have your medical insurance. It's one of those things you cannot afford to skip on. You never know when will something happen to you. Without medical insurance, you could easily end up with a bill of several thousand dollars, depending on what medical services you used.

Payday loan lenders are, basically, legalised loan sharks. They will give you a short term loan in a matter of minutes, but in return charge you an astronomical interest rate, far higher than anything you have ever encountered. We are talking about 200-300% interest. Sometimes even more.

Needless to say, due to high interest, once you get caught in this vicious circle of payday loans, it becomes almost impossible to get out of it.

Understanding basic financial concepts will allow you to make wiser financial choices and prevent you from getting into debt. Learn about following topics:

• APR
• Interest and how to calculate it
• Difference between fixed and variable interest rate
• Credit score
• Balance transfer
• Taxes
• Bankruptcy

When you get a bill from a hospital, inspect it carefully and dispute anything that you think is exaggerated or not performed at all. Lots of time hospitals charge for services or products you never actually received. Don't hesitate to ask about anything that looks suspicious.

Medicaid helps people with low income to cover their medical bills. To see if you are eligible for Medicaid, visit medicaid.gov.

If you owe to a non-profit hospital, find out if they have a charity program you could use to substantially lower your debt. Every non-profit hospital is required to have such programs. Talk to someone from your hospital who is in charge of charity programs to see if you are eligible.

Some doctors and hospitals have a non-negotiating policy, but most of them will be inclined to give you a discount, rather than risking not getting anything at all. Talk to whoever is in charge of your bill about your financial hardship and inability to pay your bill in full.

To make your negotiating position stronger, find out what is the actual cost of medical services and products. It is usually a much lower amount than what you are charged.

When talking to an agent from a collection agency, it's easy to get upset and say things that could hurt you later. When talking to an agent, remain calm and don't say anything that could compromise you. Keep conversations as brief as possible.

Even though it is illegal, some creditors won't hesitate to inflate your debt to increase their profit. When a collection agency sends you a debt, carefully examine it to see if it really is the amount you owe. If the amount is bigger than it should be, you have a right to dispute it and the collection agency handling your debt is required to obtain a proof that you owe as much as it says.

If you don't dispute your debt in a certain number of days (usually 30), it is assumed that the debt is valid.

There are many con artists out there who will pretend their collection agency obtained your debt and that you owe them a certain amount of money. Never ever pay anything to any collection agency until they prove you that they really are in a possession of your debt. Until they prove it, you are not obliged to pay them, regardless of what they say.

Employees of a collection agency that handles your debt will often be unpleasant and downright rude. Sometimes they will even make various threats in an effort to get you to pay. Stand your ground and don't let it get to you. Visit www.ftc.gov to learn about what is legal and what isn't when dealing with collection agencies. 

If they break the law in any way, report them immediately.

Write down every conversation you have with anyone from a collection agency or better yet, record it. Make a copy of every document they send you. This might come in handy if you ever end up in court.

Whatever agreement you reach with a collection agency, make sure to have it in writing.

Ask for your debt to be reduced or at least for an option to pay in monthly rates (without interest, if possible). Often, collection agencies will accept such proposal. They want their money as soon as possible and always try to avoid the hassle of going to court. 

Whatever agreement you reach, makes sure it is in writing. And carefully examine it before accepting.

Depending on the laws of the country you live in, debts can get outdated and no longer valid. In such case, you are no longer responsible to repay this debt. So before acknowledging any debt, make sure it is still valid.

Every time you send something to a collection agency, make sure you use a certified mail. That way, the collection agency will not be able to claim it didn't receive a certain document you sent to them.

Recognize what parts of your business are causing you expenses but don't give any profit in return. Try to get rid of them and/or sell them if possible to help pay off your debt.

If your customers owe you a significant amount of money, and that's one of the main reason you're in debt, explain your situation to them and make them understand your business won't survive unless they pay what they owe you. Give them a discount if needed or an option to pay you in monthly installments. Anything that will get you some money.

The worst thing to do when you owe your suppliers or creditors is to hide from them and reject any kind of contact. It's hard to deal with upset creditors and suppliers, but it's something that has to be done. Explain your situation and try to reassure them. Reach some kind of a deal that will make your debt manageable.

If you hide from them, creditors might panic or get angry at you and sue you or sell your debt to a third party. Suppliers might cut you off, shutting down your production and making it impossible for you to get back on your feet. So no matter what, never stop communicating with people you owe to.

Chapter 7 is suitable for individual or businesses who have no other way to repay their debts except to liquidate their nonexempt property and proceed earnings to their creditors. Certain requirements have to be met for you to file for chapter 7. For more about chapter 7 and to see if you are eligible for it, visit uscourts.gov

Chapter 13 offers you a repayment plan that usually lasts from 3 to 5 years. It's suitable for individuals or small business owners who have steady incomes and are able to repay at least portion of the debt. For more information, visit uscourts.gov.