My debts are out of control – what can I do?
Are you in debt? Do not panic! However, it is important to do something – the problem will not just go away on its own. Most organizations will be more helpful if you approach them first, so do not ignore the problem or the attempts of your creditors to contact you.
- First, you need to make a list of all your creditors.
- Secondly, you need to work out which ones are priority debts. A priority debt is one that could have serious consequences if unpaid. For example, not paying your rent or mortgage would leave you homeless, or not paying your gas or electricity bill could leave you being cut off and taken to court.
Non-priority debts are ones which have less serious consequences, should you not pay them. For example, loans, hire purchase, etc. However, please note that if you fail to pay your non-priority debts, your creditors may take you to court.
- Thirdly, you need to work out how much you can realistically afford to pay back. To do this, you will need to make a list of all the income and expenses for your household.
How you deal with your non-priority debts will depend on whether you have any money left over from dealing with your priority debts and paying for essential household expenses like housing costs and food. If you have money to spare, you may have several options for dealing with your non-priority debts. However, if you have little or no money left, have nothing of value to sell and think your situation isn’t likely to get better; your options will be very limited.
Here are some of the frequently asked questions about debt and credit counseling. They should help you on your way to a more stable financial future.
When do I know I need debt counseling?
As it relates to debt, there is no qualifying amount of debt (whether it is $5,000 or $50,000) that you must owe to get a debt counselor. You need to consider the monthly income you have each month against your expenses. If you can plan a way to get out of debt yourself, that may be your best bet. However, should you feel overwhelmed by the rising figures, you may need debt counseling.
How do I find a good debt counselor or credit counselor?
In your search for a debt counselor, you must be very careful. Be careful of a company that immediately urges you to join a debt management plan. Primarily, they should take an interest in your particular issues, and not throw you toward a “cookie-cutter plan”. In the same breath, you should shop around for the most cost-effective offer and ensure that all fees are stated up-front and put in writing.
What should I be careful of when consulting a debt negotiator?
There are companies that will promise to ease your debt but actually put you deeper in the hole. Some debt negotiators charge hefty fees. But that is only part of the problem – your credit takes just as much of a hit as your wallet.
General Debt Settlement Questions
Can Debt Settlement Really Allow Me to Pay Back Less Than I Owe?
Yes . . . Debt settlement can definitely help you to pay back less than you owe. The whole point of debt settlement is to settle all of your unsecured debts for a percentage of the total amount.
What Is Debt Settlement?
This is when you get a lawyer to negotiate the payment of your debt with your creditors. With debt settlement, you end up paying much less than you initially owed.
Is Debt Settlement a Better Choice Than Bankruptcy?
Yes… This is because debt settlement does little or no damage to your credit, while bankruptcy can remain on your credit report for years.
What Makes Me a Good Candidate for Debt Settlement?
To be a good candidate for debt settlement there is only one simple requirement: you must be evidently unable to repay your debts.
Where Can I Find a Trusted Debt Settlement Firm?
In finding a good debt settlement firm, it is necessary to pay attention to the lawyers that you are dealing with. You must have proof that they are trained in the required field.
Will Debt Settlement Affect My Credit Score?
Debt settlement does very minimal damage to your credit score, which is relatively easy to fix. This is because when you get your debt settled, your creditor forgives the balance owed and removes this information from his or her books.
Can I Settle My Debts On My Own?
Hiring an attorney to give you legal advice and perhaps comfort will help. This can also save you money. However, due to the fact that debt settlement is not exactly a science, you may choose to negotiate with your creditors yourself.
How Will Debt Settlement Affect My Taxes?
Usually, when you get your debt settled, the forgiven amount is seen by the IRS as “income” and is therefore taxable. For example, if you settled a debt of $10,000, for $4, 000, the forgiven $6, 000 is taxable. However, the IRS may waive this tax liability if you can prove that you were insolvent during the time that your settlement took place.
What is Debt Consolidation program?
Debt consolidation is the process by which you put all of your unsecured debts into a single manageable payment.
What do I expect after filling out the free counseling form?
A debt counselor will contact you for a counseling session.
What debts can I include in the consolidation program?
Only unsecured loans can be consolidated.
How do I know if an account is in collection?
You can get this information from your credit report.
What is bankruptcy?
This is a legal option that offers you two choices of getting debt free. You can either sell your assets to repay the amount, or you can settle installment terms, with the court.
Call an Expert Today
When in doubt – call an expert. A1 Debt Solutions is always waiting to hear from you at 888-248-4468