The most significant thing about a successful debt and finance management is to keep everything under YOUR control and not on the creditor or the debt collectors. This is possible only when you have just enough debts that you can afford and manage well. It is not necessarily bad to have some debt but it is certainly bad to have excessive debt. This is the time when you should start worrying and making amendments in your finance and debt management plans immediately.
Apart from that, there are other times when you should worry about debt and consider it to be high time to make some changes. These signs are when debt affects the following:
- Your behavior
- Your relationships
- Your dreams and
- Your professional career.
To make a complete list, you can add these following signs of having excessive that will indicate the time exactly when debts are going over your head and out of your hands.
- You monthly budget shows more payments on debt bills than on your household expenses
- You do not know how much you owe exactly
- You fall behind your monthly bills
- All your current loan applications have been rejected
- There is an excessive use of credit cards much close to the credit limits and
- Your credit score is gradually coming down.
There are a few alternative ways to get debt relief in such situations such as applying for a debt consolidation loan to reduce your number of debts to one, negotiating with your creditors to reduce the bills to your favorable limitof course after knowing the consequences of it or even filing for bankruptcy.
However, even before you look for these alternative sources, the first step for managing your debts in such situations is to get your credit score right. This is because it will enhance your borrowing power which in turn will help you to get rid of the monthly bills that are keeping you awake every night and night after night and thereby affecting both your physical as well as mental health.
Plan for credit improvement
You must follow a strategic plan to improve your credit or if you have damaged it already at least to make sure that you do not worsen the situation.
Though you will need some amount of diligence for it, improving your credit score is not impossible if you follow these common yet effective steps:
- Pay your bills on time and every time
- Even if you cannot pay more make sure that you do not pay less than the minimum amount
- Never use up all your credit limit especially when you use credit cards
- Put away any extra money that you may have after paying the minimum due on all your debts to pay more of the high interest debts
- Not take on any end debt when you are already in debt
- Make cash payments more than using credit cards and
- Track your credit by taking out a new credit report after every four months from each of the three major credit reporting bureaus.
Lastly and perhaps most importantly, you should ensure that you pay down debts faster. There are lots of debt management and repayments programs and tools that will help you to accelerate your debt repayment. These tools and programs will help you to calculate better and make “power payments” easy by adding your paid-off debts to the outstanding balances of your remaining debts.
Managing your excessive debts
One thing that you must remember here is that, this is the plan that you should follow irrespective of the fact that you have little or excessive debts. The only difference is that excessive debts will take longer time to get repaid along with more patience and diligence to regain control over your finance.
Since it is not easy to repay a debt and especially multiple debts successfully, you should always get help from the experts to manage your debts. There are lots of benefits of taking help from a professional credit counseling agency such as:
- They will formulate the best plans and suggest the best programs to take up
- They will keep you motivated and not lose hope
- They will also teach you how to stay positive if you have problems with your debt
- They will show you how to negotiate well with your creditors to reduce the amount outstanding successfully and
- They will discuss all other options available as well as make sure that you call up your creditors before you miss any payment.
More often, a debt settlement company will work on your behalf in such situations and will put in all their efforts to come out with a favorable repayment termwith your creditors and make sure that such agreements are all in writing. Just make sure that you choose a reliable debt settlement company after thorough research and going through several debt settlement reviews.
The debt settlement company will ask your creditors to:
- Divide the total payments into further smaller amounts
- Forgive a portion of your debt
- Suspend a few payments
- Lower your payments
- Waive the entire or a major part of late fees and interest.
Therefore, you can see that it is extremely useful to go through a nonprofit credit counseling service such as the National Foundation for Credit Counseling or Financial Counseling Association of America if you want better results. They will successfully put you on a budget and at the same time help you to negotiate with the lenders.
The final thoughts
Therefore, it is essential that you act on time and at the right time always and every time. You must also be wary about the credit repair companies that usually claim to fix your credit history in exchange of a fee. You only need two things for this purpose:
- A trustworthy agency to partner with and
- A strong desire to meet with the demands of your creditors.
Remember, the only legal way to repair your bad credit is by repaying your loans and current bills on time and manage your finance in the best way possible.