Everyone has debt. The question is rather the debt is current or delinquent. The trick is to keep the current debt from becoming delinquent. Do yourself a favor be smart about your debt. Keep track of the monthly debt that you have and the due dates. When charges are made on a credit card, a line of credit is utilized or a monthly expense is made keep a record of the transactions. Put due dates on calendars and set reminders on computer and cell phone.
Debt is only managed successfully when managed closely. Many people have a filing cabinet to keep track of monthly expenses. If at any time you anticipate that a payment is going to be late or less than the amount required contact the creditor right away. Familiarize yourself with the contracts you hold with the various creditors. You should know and understand the due dates, grace periods and penalties for each contract. Most contracts will provide a detailed explanation of late fees, over the limit charges and interest and finance charges in great detail within the contract.
Be mindful of what late payments or making payments in an amount that is less than the required amount have the ability to do to your account. By managing your debt with a “hands on” approach you can control the direction that your financial future travels. If debt is managed properly delinquency will not occur or will be at a minimum.
Now should an account become delinquent the first step is to make as close to the minimum monthly payment as possible because most contracts require a minimum monthly payments post on the account or face a demand for the full balance upon default. Should your debt become delinquent contact the creditor immediately for advice on a purposed plan of action. Often times the creditor may have programs that forgive delinquency fees and charges.
There should be a customer services or collections department set up at the creditor’s site to discuss programs in place and payment strategies.. An account may be able to maintain an “open” status with successful completion of certain payment arrangements.
There are many different opinions from financial experts and consumers regarding the use of Credit Counseling Agencies in order to help get out of debt. Some will tell you it’s the best thing you can do for yourself when you’ve gotten into uncontrolled debt, while others will warn you to stay as far away from a credit counseling agency as possible. How can you make the decision whether or not to work with an agency or not?
Research
If you are considering signing with a credit counseling agency to help manage your debt, you need to research. Don’t join the first company you find without comparing their services to other companies, or checking their reputation. Here are a few questions you should ask of any credit counseling agency you are considering working with:
Is the Agency a nonprofit organization?
How is the monthly payment determined?
How much money will each creditor receive each month, and on what date will they receive payment?
What will your interest rates on your existing accounts be once enrolled in the Credit Counseling Agency’s program?
How much money does the Agency receive each month out of your monthly payment, and what is it used for?
What happens if you decide you want to cancel?
These are important questions you should ask of any Credit Counseling Agency before making a decision. If your monthly payment is going to be 300, and 100 of that goes to the Agency for their services- are you really saving money by working with this company? Couldn’t you send that 100 to one of your creditors on your own, and help reduce the amount you owe? If the amount is minimal, say 20 on a 300 monthly payment, it may be worth working with the Agency if they are able to reduce your interest rates on your accounts so that more of the payments are going towards the debt rather than new finance charges.
Possible Self Negotiations
What most people don’t consider is the fact that they can call each of their creditors on their own, and ask to work out a new payment arrangement. If you explain you are having difficulty and are considering going to a credit counseling program or bankruptcy, there is a possibility that they might work with you and lower the interest rate that you’re paying, the minimum monthly payment, or both! In fact, you may be able to negotiate better terms than a credit counseling agency since creditors basically have a process that they follow when working with the agencies, and working with an individual may afford a little more flexibility and work out in your favor.
Better Business Bureau
When you’ve just about decided that you are ready to work with a specific credit counseling agency, your final step before enrolling should be to check out the company’s reputation with the Better Business Bureau. This is where you can find out about complaints made about the company by consumers like yourself, and decide whether or not you think they are an honest company worthy of your business.
After Enrolling with a Credit Counseling Agency
Your work doesn’t stop after you’ve enrolled with a credit counseling agency. You will want to review your account statements each and every month, to make sure that they are receiving payments from your agency on your behalf. There have been horror stories of individuals who enroll in credit counseling agencies, send their payments in month after month, and the agency never actually submits the payments to your creditors, or they do so late all the time which results in late fees and eventual termination from the program!