- Managing Your
Debts: How to Regain Financial Health
-
- BY VISA U.S.A.
& THE CONSUMER FEDERATION OF AMERICA
Can't
pay your bills? You're not alone.
Today, millions
of Americans are having difficulty paying their debts. Most of
those in financial distress are middle income families with jobs
who want to pay off what they owe. But it is important for you
to act. Doing nothing can lead to much larger problems in the
future-even bigger debts, the loss of assets such as your house,
and a bad credit record. The good news is that there are solutions.
The remedies provided in this article can help improve your relationships
with creditors, reduce your debts, and help you manage your money.
In brief, these solutions can help give you a new, fresh start.
 Are You In Financial Trouble?
If bill collectors
are calling you, you know you're in financial trouble. But what
if you're just having difficulty stretching your paycheck to
pay monthly bills? If you answer yes to any one of the following
questions, you should act.
- Do you routinely
spend more than you earn?
- Are you forced
to make day-to-day purchases on credit?
- Are you able
to make only the minimum payments on monthly credit card debts?
- If you lost
your job, would you have difficulty paying next month's bills?
With budgeting
guidance, we now have peace of mind. We have learned a most valuable
lesson about money management. Our future looks brighter.
What You Can Do For
Yourself
Review your
specific obligations that creditors claim you owe to make certain
you really owe them.
If you dispute
a debt, first contact the creditor directly to resolve your questions.
If you still have questions about the debt, contact your state
or local consumer protection office or state Attorney General.
Contact your
creditors to let them know you're having difficulty making your
payments. Tell them why you're having trouble- perhaps it's because
you recently lost your job or have unexpected medical bills.
Try to work out an acceptable payment schedule with your creditors.
Most are willing to work with you and will appreciate your honesty
and forthrightness.
The Fair Debt
Collection Practices Law prohibits a debt collector from showing
what you owe to anyone but your attorney, harassing or threatening
you, using false statements, giving false information about you
to anyone, and misrepresenting the legal status of your debts.
Remember that under other federal laws to collect debts, creditors
cannot seize most government assistance and can only garnish
a portion of wages to collect debts.
Budget your
expenses. Create a spending plan that allows you to reduce your
debts. Itemize your necessary expenses (such as housing and health
care) and optional expenses (such as entertainment and vacation
travel). Stick to the plan.
Try to reduce
your expenses. Cut out any unnecessary spending such as eating
out and purchasing expensive entertainment. Consider taking public
transportation rather than owning a car. Clip coupons, purchase
generic products at the supermarket, and avoid impulse purchases.
Above all, stop incurring new debt. Consider substituting a debit
card for your credit cards. next page >
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