When Debts Get Out of Control

Many of us are more concerned about credit thana lot of personal belongings you can part with, you
debt. That's because the majority of us have amight hold a garage sale.
relatively easy time getting credit. In the mail, we are6. Consider re-financing your home if interest rates are
bombarded with pre-approved credit card applicationsin your favor and it makes financial sense.
and most of us carry around a fistful of cards. This7. Beware of debt-consolidation loans. In theory, the
causes the mentality of being able to think we can buyloan sounds appealing; a lender agrees to pay off all of
as opposed to what we owe.your bills by making you one big loan. The lender
Here are some steps to consider alleviating debthandles all the creditors and you make only one
problems:monthly payment to the lender.
8. Don't hide from your creditors. Let them know you
1. Face the problem. Until you admit you have aare having financial problems and express a sincere
problem, you are not prepared to fix it.desire and commitment to pay your bills. In most cases,
2. Make a plan. Review the last six months of youra creditor will be flexible and work with you to design a
spending habits to figure out just where your moneyrepayment plan that you can meet.
goes. How much money comes in each month and9. If necessary, seek professional advice. There are
what do you need to pay off debts?nonprofit counseling offices across the country that
3. Curb spending habits. Find ways to reduce spending,offer assistance to people who are having debt
and make no new major purchases. Stop using creditproblems. To locate a counseling center near you,
cards. If you can't bear to cut them up, tuck themcontact: The National Foundation for Consumer Credit.
away in a safe deposit box.10. Pay more than the minimum for credit card bills.
4. Consider using your savings, if you have any, to payYou will have to make a few sacrifices for this (giving
off certain debts. If your savings account is paying 5up a few luxuries), but the increased payments will
percent interest and you are paying 20 percentsave you hundreds or thousands in interest payments.
interests on your credit card, you are getting way11. As a last resort, you can file for bankruptcy. Your
behind.credit record will hold this for ten years which might
5. Can you increase your income? Maybe you can putmake it impossible for you to obtain credit even if you
in extra hours at work or get a part-time job during thecan afford it. Do a thorough research on bankruptcy
weekends. Do you have any assets you can sell?and find out if it's the best option for you, what it entails
Extra furniture, a car you really don't need? If you haveand its end results.