The FTC has a document about the options it has if it cannot fulfill its obligations, or if these obligations are too burdensome. In general, the options are: continue paying, reach an agreement with the creditor, reach an agreement with the collection agency or go bankrupt (bankruptcy). This article can help you understand your options a little more and understand your situation a little more. Please leave your comment and share after reading it:
Indebted to the neck
Having trouble paying your bills? Are you receiving payment intimidation notices from creditors? Are your accounts being delivered to debt collection companies? Are you worried about losing your home or car?
You are not alone. Many are those who at some time in their life face a financial crisis. Whether the problem is caused by family or personal illness, loss of employment or simply having spent too much, it may seem overwhelming, but it can often be overcome. Actually, the important thing is to prevent your financial situation from going from bad to worse.
If you, or someone you know, is going through a financial storm, consider the following options listed below:
Realistic budget, credit counseling by a renowned organization, debt consolidation or bankruptcy. How will you know which is the best alternative for you? This response will depend on the level of your debt, your degree of discipline and your future prospects.
Development of a budget:
The first step in taking control of your financial situation is to make a realistic assessment of all your income and all the money you spend. Start by listing all your sources of income. Then, detail all of your fixed expenses – those that are the same every month – such as your mortgage payment, rent, car fees or insurance premiums. Then make a list of variable expenses, such as entertainment, recreation or clothing. Detailing all your expenses in writing, even those that seem insignificant, can be a great help in keeping track of your expense scheme, identifying those that are necessary, and sorting the rest by priority. The objective is to ensure that you can meet all the basic requirements: housing, food, health care, insurance and education.
You can find information about budgeting techniques and money management at your local public library. Most of the communities have services, at low cost, of advice on budgets that can assist you in the analysis of your income and expenses and in planning them. Check the Yellow Pages or contact your local bank or consumer protection office for information about advisory services. In addition, many universities, military bases, credit unions, and housing authorities carry out non-profit counseling programs.
Get in touch with your creditors:
If you have difficulty paying your debts, contact your creditor immediately. Let him know the reason why he is having difficulty paying and try to agree on modifications to his payment plan that allow him a more manageable level of repayment. Do not wait for your accounts to be referred to a debt collection agency. At that point the creditors will have lost faith in you.
Dealing with debt collectors
The Fair Debt Collections Practices Act , which deals with the fair and fair collection of debts, is the federal law that stipulates the manner and times or occasions when the debt collector should contact you. A debt collector may not call you before 8 am or after 9 pm; You also cannot call your work if your employer disapproves of these types of calls. Collectors may not harass you, make false statements, or use unfair practices in the exercise of debt collection. Debt collectors must respect a written request from you (the debtor’s) to stop future contacts.
If you are not disciplined enough to draw up an applicable budget and be firm in complying with it, if you cannot reach refinancing agreements with creditors or your increasing bills slip out of your hands, consider contacting a credit counseling service. Possibly, your creditors will have a better disposition to reduce payments if you submit a debt refinancing plan advised by a reputed company. In these types of plans, every month you deposit money to the credit counseling service. Your deposits are used to make the corresponding payments to your creditors according to a payment schedule prepared by the advisor. As part of your debt repayment plan, you may have to commit not to request, or use, additional credits during your participation in the program.
A successful refinancing plan will require you to make regular and timely payments, and it may take up to 48 months or more to be completed. Check with credit counseling about the estimated deadlines for your plan. Some credit counseling organizations do not charge fees or charge low fees for the administration of the plan; others charge a fixed monthly charge that can result in considerable cost over time. Some credit counseling services are funded, in part, by contributions made by creditors.
While establishing a debt refinancing plan can eliminate much of the tension in dealing with creditors and facing overdue bills, this does not mean that you can forget your debts. You continue to be responsible for paying all debts that are not included in the plan. You have the responsibility to review the monthly summaries sent by your creditors to ensure that your payments have been received and credited. If your repayment plan is based on an agreement with your creditor to lower or eliminate interest and financial charges, or on the suspension of late payment charges, you have the responsibility to ensure that such concessions have been reflected in the account summaries.
A debt repayment plan does not erase the records based on your credit history. Under the Fair Credit Reporting Act , which deals with impartial credit reports, accurate information about your accounts can remain on your credit reports for seven years. In addition, your creditors will continue to report information about the accounts that are being managed under a refinancing plan. For example, a creditor may report that an account is under credit counseling, that payments have been made out of date or that have not been made, or that there are repayments or other concessions. The demonstration of a timely payment scheme will allow you to obtain credit in the future.