When the debt collectors come calling, it can feel like the hounds of hell have been released to snap at your heals. The anxiety volume is turned up to maximum volume, and you become afraid to answer the phone to avoid creditor phone calls. I've been there. It's no fun. So let's discover how to avoid debt collection, get back on your financial feet, and put this behind you.Debt is a serious subject in the US. With a lackluster if any economic recovery underway - public, consumer, and federal debts still stand at an all time high. As of 2010, national credit card debt was at $886 Billion according to the US Census Bureau. TransUnion reported a 17 percent reduction in credit card delinquencies in 2010, a positive trend nationally but what about your debt.
Nevertheless, you may still be knee deep in debt, facing foreclosure, debt collection agency harassment and unable to pay your bills.
The thought of losing your home, vehicle or other assets due to crushing debt can be overwhelming.
However, you must not despair, as desperate as it may seem, their is help available and you can avoid repossessions, foreclosure or collections.
Loss of work, illnesses and reckless spending can compound the problem but there are solutions that provide relief.
You can still pick up the pieces and get out from under your debt. The following are a few of our recommended strategies that can help you avoid the collection agencies grip.
They include:
1.Stringent Budgeting
A personal budget is the first step towards managing your finances effectively. A budget is a list of your total income, expenditures and savings. First, make a column listing all your sources of income and another one listing fixed expenses. These are constant expenditures such as mortgages, car payments, rent and insurance premiums.
Then, make a third column with varying expenses such as entertainment, clothing and similar recreation activities by category.
This will give you an insight as to how you spend your money every month. Prioritize spending on essential items only, so you can make sufficient savings to begin clearing the liabilities and paying off what you owe.
2.Credit Counseling Services
Experts recommend these services for people who need help to manage their finances. Sometimes helpful advice or a professional nudge is all you need to right your money matters. Many credit counseling services are non-profit organizations, that assist people come to terms with their finances and help you to organize your financial matters. In addition these services have a portfolio of resources they can recommend to help with your unique situation while showing you how to avoid debt collection. They offer their services online, via telephone or directly from offices located throughout your city.
The best credit counselors provide one on one sessions offering help from local churches, credit unions, universities, housing authorities and branches of the US Cooperative Extension Services. You can also inquire about debt counseling service providers from your local consumer protection agency, friends or family members.
Credit counselors can recommend to you a step by step plan to help avoid collections on your debt and advise you what will provide you the fastest path towards relief.
3.Debt Management Plans
A debt management plan (DMP) is mostly suitable for people whose financial problems, are as a result of inability to make payments on time. Late payments due to inattention can lead to debt increasing penalties, and late fees overwhelming your ability to pay down your debt. Collection agencies typically will come after you for much more than you originally owed after having tacked on numerous penalties and fees.
Once you enroll for DMP, the credit counselor arranges with your creditors to deduct payments from deposits made on a special account. This is only possible with unsecured loans such as credit card payments, student loans or medical bills.
As a first step, you have to confirm with creditors whether it is possible to obtain lower interest rates and fee waivers on the loan. This would enable you to develop an effective time based payment plan with the credit counselor. This debt reduction method may allow you avoid taking up additional credit during the repayment period.
4.Debt Consolidation
This debt relief method entails lowering of your debt through a second second cheaper credit line, or home equity line of credit. You use this second loan to reduce your credit payments by restructuring your debt into financing with better terms for you. The Truth in Lending Act requires lending institutions to disclose price, terms, results, offers and consequences of failure to make payments; before you sign, use this information to calculate how much additional money you will save every month.
5.Debt Settlement Services
Debt settlement companies negotiate with creditors to reduce your debts. These services often claim that they can slash your debts by up to 70 percent. Is this a scam? No, not exactly, what is done is they negotiate on your behalf with your creditors, who agree to forgive a portion of your debt in order to get a little back. As common sense dictates, this only works if the collection agencies pursuing you are near giving up, or there is a very real threat of your declaring bankruptcy and walking away from what you owe. Settlement services are an alternative to bankruptcy, and it is, but it is still reported negatively on your credit report.
Consumer debt in the US was has been at an all time high in the US for the past three years, which is the about the same time the recession began in earnest. The ripple effect has been the mushrooming of numerous debt relief options in the market. While some of these methods are commendable, others may be fraudulent scams that take advantage of real people in emergency need.
Research carefully the debt relief options you are trying to get help from to avoid debt collection. Any company that claims to show you how to avoid debt collectors must disclose exactly how they intend to go about it.
By: Tanya Calaban
http://www.badcreditx.com/
Really I am happy to provide the 1st comment over your post and confusing that how you don't have any comments such type of great post. Because I have never seen this type author who brilliantly describe how to avoid Debt Collection and also your presentation is different from other. Thanks......
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