Kelly Shelton

Having trouble paying your bills? Worried about losing your home or car? Dreaming of debt elimination? You're not alone! Many people are facing financial crisis. Whether your debt came from family issues, job loss, illness, or overspending -- the results can be devastating.

Good News! Your finances don't have to go from bad to worse. You have the power to make changes in your financial life and eliminate debt. If you or someone you know is drowning in debt, there are several options ranging from temporary fixes to more permanent solutions. Determining which debt elimination method works best for you - depends on your level of debt, your ability to make monthly payments, your discipline, and your future prospects.

Consider these debt elimination options: a realistic budget, credit counseling from a reputable organization, debt settlement, debt consolidation, or bankruptcy. They each have different advantages and disadvantages, an unbiased financial analysis from an expert is very helpful in determining which option works best for you, get you Financial Health Checkup today!

Debt Elimination 101 - Self Help for Long Lasting Solutions 

Step 1: Developing a Budget or Spending Plan is the first step to taking control of your finances and the key to Debt Elimination 101. Whatever solution you choose, a realistic summary of how much money comes in monthly and how much money goes out is the best way to get a handle on your financial future and eliminate debt. The goal is to actively develop a plan to make ends meet and provide life's necessities: housing, food, health care, insurance, and education, all while eliminating your debt.

Knowing how you spend and manage your money, not only helps keep your debt from rising, it is a realistic way to pay it off sooner and build wealth! Debt elimination is possible with a clear plan including where you are and the exact steps to achieving debt elimination. Summarizing your fixed and variable expenses along with your sources of income gives you the clearest picture of where to start. It's easier than you think and takes the worry out of the "unknown."

When you know your cash flow position then you're able to determine what debt elimination solution is best for you, and you're better equipped to negotiate with your creditors. For an excellent customized blueprint on developing a healthy Spending Plan and eliminating your debt see Building Your Budget or Spending Plan.

Step 2:  Contacting Your Creditors - Immediately contact your creditors if you're having trouble making ends meet or knee deep in debt. Explain why you're having financial difficulty and try to work out a modified payment plan to reduce your payments and interest rates to a more manageable level. Ask them to re-age your account, which brings you current. Bringing your accounts current gives you a fresh start and is the first step to debt elimination. Don't wait till your accounts have been turned over to a debt collector, by then they've given up on you.

The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. See Dealing with Creditor_Harassment for full details on your rights and how to protect yourself. 

Step 3:  Credit Counselors - Choose Wisely!  If you can't work out a repayment plan with your creditors, consider contacting a credit counseling organization. Credit Counseling is a good debt elimination option to consider when you are behind on your monthly payments with your unsecured debts (credit cards, finance companies, collections etc.), you are unable to make the minimum payments, and you are being charged unreasonably high interest rates. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. Be aware that, just because an organization says they're "nonprofit," there's no guarantee their services are free, affordable, or even legitimate, see Questions to ask your Credit Counselor.

Questions to Ask Your Credit Counselor

An experienced credit counselor welcomes your questions and encourages your progress towards debt elimination with ongoing coaching. Ask these key questions before signing up for their debt elimination help:

1. How do you determine the amount of my payments?
2. How will I know my creditors have received payments?
3. How often can I get status reports on my accounts?
4. Can you get my creditors to lower or eliminate interest, finance charges, or late fees?
5. Is a debt-repayment plan my only option?
6. What if I can't maintain the agreed upon plan?
7. What debts are excluded from the debt management plan?
8. How long before my debts are eliminated?
9. Who will help me with my questions or problems with my account or creditors?
10. How will enrolling in your services affect my credit?

For information regarding debt elminination, consolidation, refinancing, or bankruptcy, see Knee Deep in Debt Part II.

Want to know what debt elimination service is best for you? Talk to an expert who can provide you with a detailed analysis to determine what service best matches your circumstances.

This information is provided solely for educational and informational purposes and does not constitute legal advice. References: www.ftc.gov