What to Do If Your Debt is Out of Control
Has your debt gotten out of control? Here are some tips to help you get your debt under control and improve your financial situation.
You may have taken on debt because of an unexpected setback like a job loss, illness or injury, divorce, unexpected home or car repairs, or simply because your expenses had gotten ahead of your income. You may have experienced several unexpected setbacks all at once, too.
You've now realized that your debt is out of control. You may even be thinking about bankruptcy, even though bankruptcy can really damage your credit score.
The good news is that you can take control of your debt and get on better financial footing by following these tips:
Avoid taking on any more debt. There's an old saying: "If you find yourself in a hole, the first thing you should do is stop digging." That's true of debt, too.
Talk to your creditors. You may be able to work with your creditors to lower your interest rate or monthly payment, consolidate your debts, or change the terms of your debt. Talk to your creditors right away, because you have more options to manage your debt if you talk to your creditors as soon as you think you may have a debt problem.
Look into debt consolidation. Depending on your financial situation, debt consolidation may be able to help you lower your total debt payments and free up extra money to save for emergencies or pay off other debts. In addition, debt consolidation may also help you organize and streamline your finances with just one payment.
For more information about debt consolidation, visit our Debt Consolidation page.
Be careful about "debt settlement." You may have seen ads for "debt settlement" or heard about ways to "eliminate your debt." While the idea of settling or eliminating your debt may seem tempting, it may hurt your credit score, because settling or eliminating your debt often means getting your creditors to accept less than you owe or getting your creditors to treat your debt as unpaid.
Get financial counseling. Financial counseling may be able to help you find ways to increase your income and decrease expenses, work with your creditors, find out what debt help is available, help you make the best decision about managing your debt, and plan for your financial future.
Make a plan for handling your debt and stick to it. Look for ways to cut costs and increase income, save for emergencies, pay down your debt, and stay out of debt in the future.
Protect yourself. Make sure to get any details about help with debt in writing, read everything carefully before you sign it, and avoid agreeing to anything that seems too good to be true or too easy to do.
Related Articles:
How Debt Consolidation May Improve Your Credit
These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.
