Aug 06 2009
Managing Your Debt
Debt management is very popular, even more so when money isn't in abundance. Most folks have a small portion of debt while others are drowning in it. Debt management should be discussed when you are consistently late or altogether cannot make you minimum monthly payments. There are many ways you can do this.
To begin to handle credit card debt management, put together a monthly budget that targets payoffs. This plan should list all credit cards, their balances, what the minimum payment is, what amount is actually paid, what interest rate and what is the finance charge. Once you do this, you have to things you can do to prioritize them. Decide to either make more payments to the card with the lowest balance, or to the card that has the highest interest rate. Continue to make the minimum payments on the rest of the credit cards. Choosing to pay off the card with the lowest balance is a good choice because the debtor will be encouraged by such progress they've made at such an early point of their efforts. The emotional progress that ones achieves by doing this, is often better than the little money that will go towards cards with higher interest rates.
-Debt Payoff Acceleration: Once the first card is paid off on either plan, continue to allocate the same amount of money monthly to your credit bills, but add the amount you were paying on the paid off card to the next card in line. They would continue to do this until all the debts are paid. This type of debt management allows you to pay the same rate each month, while progressively increasing the amount on each card, effectively accelerating the debt reduction on all cards.
Sometimes, if you need major debt credit management, you may have to receive help from a formal debt consolidation program. This can also be done by you, but first you have to call all creditors that you owe money to, and try to get them to lower your interest rates, or let you make smaller payments, or have the balance settled. Commercial debt consolidation companies are more experienced in these matters and can probably make better financial decisions with regard to lowering payments, interest rates or the amount owed faster than the debtor can. With this, a person usually makes one low monthly payment to the debt consolidation company and they then pay the creditors because they were able to get lower rates for a longer period of time. Your budget will be somewhat relieved, since the amount you pay them will be less than what you are having to pay now.
-Debt Negotiation: This can be done by you, but it is a tactic of debt management better handled by a professional company. They will charge some type of fee, or get a cut from the creditors as you pay your bills. They are best able to negotiate breaks on interest, fees, and payments for you.
-Debt Consolidation Loan: You can also get a personal consolidation loan that might be able to cover all of your credit debt, and in turn you will be left with nothing but one payment for that large loan. Checks are written to each creditor by the lender. Hopefully, if the loan is done right, a person can expect to be debt free in a much short period of time and they will get to save some money.
-Debt Management through Bankruptcy: This is a last resort, but a Chapter 13 bankruptcy will allow you to restructure your bills, making credit debt management easier. With this plan, you do get to work on your lending obligations to pay. For ten years, your credit will be adversely affected. Your last and final option is to file for Chapter 7 bankruptcy, but that in turn will leave your creditors out in the cold and with no payments.
