When bills and collection notices pile up they begin to feel insurmountable. If you are struggling with debt, know that you are not alone; millions of people in the U.S. and Canada are also struggling with debt. Renowned figures like Abraham Lincoln, Thomas Jefferson, Walt Disney and Henry Ford all had serious debt problems during their lives. This article offers you some steps to begin managing and controlling your debt. If you need legal assistance with debt settlement or a collection matter, call your LegalShield Associate or provider law firm today.
- Take a deep breath and get started. The first step is always the most difficult. Start by making a list of whom you owe and how much you owe them. If debt has gone to a collection agent take note of the original creditor. Hang on to letters, bills and invoices, as your LegalShield provider attorney may need to review them.
- Make sure collections are legitimate and the debt is actually yours. There are fraudulent debt collectors who will use extreme intimidation to convince you to pay debt you do not owe. They may also try to convince you that you owe money for a family member’s debt. Talk to your LegalShield provider law firm before agreeing to pay on anyone else’s debt. You may also receive collection letters from legitimate collectors who have confused you for someone else or are not aware that you already paid off the debt. Carefully examine debt collection letters and bills.
- Analyze your budget to determine how much you can commit to paying off debt. Getting a handle on your finances requires developing and sticking to a tight budget. Avoid large purchases where possible and analyze smaller discretionary purchases like dining out or daily trips to the coffee shop. Once you have trimmed your budget determine how much you can put toward your debt. Even if it is a small amount it will make a difference over time.
- Prioritize your debt. You will want to strategically prioritize what you owe. Understand the difference between secured debt and unsecured debt and make sure you stay on top of secured debts so that you do not run the risk of losing your house or car. Also make sure you stay current on any court ordered debt such as child support or spousal support so that you do not get in trouble with the court. From there, determine which bills have the highest interest rates. Paying off debt with high interest first will lower the total amount you pay over time. If debt is in collections and headed towards court for potential garnishment (learn more about wage garnishment here) you will want to deal with it as soon as possible to avoid additional legal fees.
- Work with creditors and debt collectors to settle debt or develop payment plans. Most debt collectors want to work with you to negotiate payment. If you can afford to make a one-time lump sum payment, you may be able to negotiate a lower settlement amount. If you are unable to make a one-time payment, consider a payment plan. Make sure you get any agreement you make in writing. Your LegalShield provider law firm can help you negotiate with creditors and debt collectors. Call your provider firm to discuss your options or to review the terms of a settlement agreement.
- Beware of debt consolidation companies. LegalShield associates and provider law firms frequently hear from members who were targeted by misleading debt consolidation or credit repair companies that failed to deliver on promises to reduce or eliminate debt. Even legitimate debt consolidation programs may end up costing you more than you owe. Review potential debt consolidation or credit repair programs carefully and speak with your LegalShield provider before signing any contracts or making payments.
- You may need to consider bankruptcy. Sometimes debt becomes truly insurmountable and you need to take other steps, which may include bankruptcy. Bankruptcy is not the end and doesn’t mean you are a failure; it may provide a fresh start and eventual recovery. Abraham Lincoln, Thomas Jefferson, Walt Disney and Henry Ford all utilized bankruptcy laws to recover from debt. Click here to read our article on recovering from bankruptcy. Call your provider law firm to learn more about your legal options.
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