June 29,2009
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How to Handle Debt, Pt.3
Help Yourself.You’ve heard how those credit card balance transfer offers can have devastating consequences so fighting the debt problem is best not solved by trying to move debt around. One option available is to help yourself. It isn’t the easiest thing to accomplish, however, with a little tenacity and patience you can do it. Start by developing a realistic budget. You can find books at the library or bookstore that will give you step by step details on how to form the budget. A good budget will help you track your credit card spending to identify exactly where you money is going. You’ll be able to determine what your priorities are and where to cut spending. The best way to proceed is to put the credit cards away and apply for a debit card that is directly tied to your bank account. With a debit card, you’ll still be able to track spending while not carrying debt.
Next, begin contacting your creditors. Tell them about your financial difficulty and your desire to show goodwill in paying your debt. Ask them if they’ll work out a feasible payment plan that would help you stay within your budget. Most credit card lenders will be cooperative. Of course, expect to pack that card away. Typically, banks will negotiate only with your agreement to stop using the credit card. Creditors generally restore credit when the consumer has paid the balance off as agreed. Whatever you do, DO NOT wait until the lender has sent the account to the collections before contacting them. They will not negotiate past that point.
If your account does go to collections, keep it in mind that the Fair Debt Collection Practices Act dictates how and when a debt collector may contact you. Debt collectors are only allowed to contact you during the hours of 8 a.m. and 9 p.m. If your employer stands behind you, collectors are prohibited from contacting you at work. Debt collectors are prohibited from harassing you, lying to you, or using unfair practices to collect on any credit card or other debt. Upon your written request, they must end any attempt to contact you in the future. If you experience any type of forbidden action by collectors, you should notify the Federal Trade Commission.