Get Out of Debt
Create a Budget - The very first and most important step in improving your financial situation is to evaluate your income vs. your expenses. Be honest and realistic. Identify expenses that are essential, and cut back or eliminate those that aren't. Online services, like Mvelopes Personal specialize in helping you develop, and stick to, your budget.
Try Contacting Your Creditors – If you're having trouble making your payments, contact your creditors right away. Explain the problem and find out if they're willing to negotiate a modified payment plan.
Don't be Intimidated by Debt Collectors – There are federal laws that regulate how and when debt collectors may contact you. Make sure you understand your consumer rights regarding debt collection. Typically, credit card debt is unsecured.
Credit Counseling - If you're unable to resolve your debt on your own, you might consider enlisting the help of a credit counseling service. They can help relieve some of the stress of dealing with financial problems on your own. Counselors may help you reduce payments with creditors and can help you design a manageable debt repayment plan.
Auto and Home Loans – Don't take unnecessary risks with these types of loans. If you're at risk for defaulting on your auto loan, think about selling the car to pay off the debt to avoid the added costs of repossession and the negative entry on your credit history. Contact your lender right away if you fall behind on your mortgage. If the situation is temporary and you're making a good-faith effort to repay the debt, most lenders will work with you to avoid foreclosure.
Debt Consolidation – Many people choose a second mortgage or home equity line of credit to consolidate debt and lower the cost of credit. These loans can add up cost-wise, but may offer certain tax advantages not available with other kinds of credit. These loans require your home as collateral though, so consider carefully. Try to consolidate credit card debt over to low apr credit cards and save on interest.
Bankruptcy - Personal bankruptcy should be your last resort. The consequences of such an action can be far-reaching and long-lasting. Bankruptcy stays on your credit report for 10 years, and can make it nearly impossible to qualify for credit, purchase a home, gain life insurance, or even get a job. If you can't resolve your debts in any other way, this legal procedure may offer you a new start, but be sure to seek financial and/or legal counsel before deciding if this option is right for you.
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