Getting Help With Your Bills
It begins as a creeping feeling. The number of bills appearing in the mailbox is increasing, and there seems to be less and less left over after they are paid. You experience an indeterminate queasy feeling when you think about your mounting debt. What can you do?
Top 10 Ways To Get Help With Bills
The following list is a progression of helpful steps to attack your problem. As you study each of the 10 items, think realistically about yourself and whether each option is reasonable for your current situation and your known spending behaviors. As you eliminate those that are not a fit for you, you will be left with your true options and can then select the one(s) to which you will commit.
- Take a reality check of your spending. For an entire month, write down every bill that comes in, as well as every expenditure you have. Where can you cut? What bill can you eliminate quickly? What expenditures are luxuries rather than necessities?
- Develop a budget. Write down your total income for a month. Add up your total bills for a month. See what is left. Then, estimate how much in non-bill expenditures you have - food, gas, clothing, toiletries, etc. You should have a good idea of these expenses if you have spent one month itemizing all purchases. If there is money left, decide that you will not "blow" it on non-essentials. All extra money will go toward a bill or two that you will tackle and pay off. Stick to your budget - no cheating. If you are easily led astray or if you are an impulse spender, this step is not for you. Pay off the smallest bills first and then tackle the larger ones. You will get a sense of satisfaction more quickly, and this can be a good motivator.
- Call your creditors and ask for extensions, reductions in interest rates or a reduced total balance. Sometimes, creditors are willing to accept less if they think the alternative is not getting paid at all. If you are still lucky enough to get "zero interest rate" credit card offers, switch high interest balances to them, but be careful to watch for the end of the introductory period. When it is over, the new interest can be a "killer." Plus, remember, every time you get a new credit card, your credit score suffers. If you transfer a balance to a new card, cut up your old card so that you are never tempted to use it again.
- If your credit score is still within the good to excellent range, you may be able to secure a personal loan from your bank or a credit union. This loan can be used to pay off revolving and credit card debt and usually carries a smaller interest rate and payment.
- If your credit score is not good enough to qualify for a personal loan, consider a collateral loan. Most of these loans will involve using the equity in your home, although some lenders will take your car title or other valuable property as collateral. These loans are called "secure," because if you default, the creditor gets the property.
- Sell valuable items and pay off your debt. Obviously, this option only works if you have enough of value to sell. I have seen people part with baseball card collections, priceless antiques, and one-of-a-kind art to pay off debt - not a pretty picture because these are irreplaceable when a financial situation turns around.
- Borrow money from a relative at no or low interest. If you are lucky enough to have such a relative, be certain that you pay this back as agreed. Nothing kills family relationships faster than bad feelings over money!
- Check into debt consolidation if you are unable or lack the will power to stick with your own plan. Consolidators can handle negotiations with your creditors and develop a payment plan with which you can live. There will be fees, but chances are you will get out of debt faster and with less pain than your previous failures.
- Chapter 13 Bankruptcy: You will need a lawyer (for a fee), and there will be court costs. Basically, you choose which debt you want to include in this bankruptcy. The total debt is usually reduced by agreement with creditors, and a payment plan is developed which generally lasts 3-5 years. You cannot fudge on payments, and you will not be able to get any new credit during this time period. It is a drastic step but sometimes unavoidable.
- Chapter 7 Bankruptcy: Again, you will need a lawyer, and there will be fees and court costs. This plan allows you to wipe out all of your debt, however, new federal law makes this a more difficult option. You have to prove that you cannot possibly pay your debt, you may be forced into debt counseling for a period of time, and your credit will be affected for 10 years. While many see this as a "fresh start," it is not without significant consequence.
You should have two or three options from this list that could work for you. Identifying them is your first step and will at least give you some hope that your debt can be tackled successfully.
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