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Managing Your Debt

Options, Tips & Advice Student Loans
Debt Collectors Credit Laws, Bankruptcy, etc

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Options, Tips & Advice

Credit Repair (Consumer-SOS)

Negotiating With Creditors (Consumer-SOS)

Can't Pay Your Rent, Mortgage, Utilities Or Medical Bills? (Consumer-SOS)
Step by step on what to do and where to go for assistance.

Bartering For Goods or Services When You Have No Cash (Consumer-SOS)

Low Cost Food (Consumer-SOS)

Bills To Pay Off First (Consumer-SOS)

Credit Counseling (Consumer-SOS)

Consolidating Your Debt (Consumer-SOS)

Pay Half The Amount Bi-Weekly (Consumer-SOS)
Works great if you're stuck at high interest rates.

Keeping Credit Card Rates Low
Tips on finding low rates, low balance transfers, and more.

Low Interest Loans To Pay Off Your Debt (Consumer-SOS)

High Risk Loans: What To Look Out For (Consumer-SOS)

Time Limit On Negative Info, Time Period To Collect A Debt & The Maximum Amount You Can Be Charged (Consumer-SOS)
Links on statutes of limitations, how long negative info remains on your report and answers to other frequently asked questions.

How  I Kept My Credit Card Rates Below 3% For Years (Consumer-SOS)

How To Crawl Out From Under Your Credit Card Debt
Tired of making big monthly payments to finance your cost of living? Here's some basic good sense advice on tackling your credit card debt. Ignore advice about shunning low teaser introductory rates and instead see Keeping Your Credit Card Rates At A Minimum.

Risky Loans

Consumer Tips On Risky Loans, Payday Loans, etc. (Google)

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Bills To Pay Off First

Bills To Pay Off First
Tells you which bills are most important and the ones that can do the most harm.

Dealing With Mounting Bills (Consumer-SOS)

What Happens When I Fail To Pay My Bills (Nolo.com)
Short takes on student loans, mortgages, utilities, car payments, etc.

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Which Debts Should I Pay Off First?

If you are having serious financial problems, you probably are having trouble keeping current on all of your debts. You can only cut expenses so much, and your income cannot be stretched to cover all of your obligations. This leaves you with no choice but to delay or eliminate payment on certain of your debts.

One of the most important choices you will have to make is which debts to pay first. Your home or apartment, your utility service, your car, and even your household possessions may be at stake. Following the rules listed below may make the difference between keeping or losing this property.

Instead of delaying or eliminating certain debt repayments, you may be tempted to take out more debt to repay old debts. This is generally a bad idea.

Nevertheless, your main strategy in dealing with too much debt is deciding which debts to pay first, which you can refuse to pay, and which you can put off until later. The most important creditor to pay is not necessarily the creditor that screams the loudest or the most often. Creditors who yell the loudest often do so only because they have no better way to get their money than to pressure you to pay. Of more concern are creditors who not only threaten, but actually can take quick action against your residence, utility service, car, or other important assets.

You should direct your limited resources to what is most necessary for your family - - typically food, clothing, shelter and utility service. Unfortunately, there is no universally applicable list of the order in which debts should be paid. Everyone's situation will be different. Instead what follows are sixteen rules about how to set priorities.

Pay off creditors who can
take the quickest action to
hurt you, not those who are
calling you the most often. Pay your
mortgage or rent first; worry about
credit card or doctor bills later.


Always Pay Family Necessities First. Usually this means food and essential medical expenses.


Next Pay Your Housing-Related Bills. Keep up your mortgage or rent payments if at all possible. If you own your home, real estate taxes and insurance must also be paid unless they are included in the monthly mortgage payment. Similarly, any condo fees or mobile home lot payments should be considered a high priority. Failure to pay these debts can lead to loss of your home.
If you are having very serious unresolvable financial problems which will require you to move to a cheaper residence, you might choose to stop paying the mortgage or rent on your existing residence. When you do so, you should not use that money to pay other debts, but rather save it as a fund to use for moving.


Pay What You Must to Keep Essential Utility Service. While this may not always require full payment (such as during winter moratorium on disconnections), whatever payments are necessary should be made if at all possible. Working hard to keep your house or apartment makes little sense if it is not livable because you have no utilities.


Pay Car Loans or Leases Next If You Really Need Your Car. If you need your car to get to work or for other essential transportation, you will usually make your car loan or lease payments next after food, housing costs, new medical expenses, utilities, and clothing. You may even want to pay your car loan first if the car is essential to holding onto your job.

If you do keep the car, stay current on your insurance payments as well. Otherwise the creditor may buy at your expense even more costly collision and theft insurance that gives you much less protection. In most states it is also illegal not to have automobile liability coverage. If you can do without your car or one of your cars, you not only save on car payments, but also on gasoline, repairs, insurance, and the like.


You Must Pay Child Support Debts. These debts will not go away and can result in very serious remedies - including prison for nonpayment.


Income Tax Debts Are Also High Priority. You must pay any income taxes you owe that are not automatically deducted from your wages, and you certainly must file your federal income tax return even in you cannot afford to pay any balance due. The government has many collection rights, particularly if you do not file your tax return, that are not available to other creditors. Remember, though, if you have lost income due to a change of circumstances, your tax obligations will also be reduced. Pay only what is necessary.


Loans Without Collateral Are Low Priority. Most credit card debts, attorney, doctor and hospital bills, and other debts to professionals, open accounts with merchants, and similar debts are low priority. You have not pledged any collateral for these loans, and there is rarely anything that these creditors can do to hurt you in the short term. Many won't bother to try to collect in the long term.


Loans With Only Household Goods Collateral Are Also Low Priority. Sometimes a creditor requires you to put some of your household goods up as collateral on a loan. You should generally treat this loan the same as an unsecured debt, that is as a low priority. Creditors rarely seize household because they have little market value, it is hard to seize them without court process, and it is time consuming and expensive to use a court process to seize them.


Do Not Move a Debt Up in Priority Because the Creditor Threatens Suit. Many threats to sue are not carried out. Even if the creditor does sue, it will take a while for the collector do be able to reach your property, and much of your property may be exempt from seizure. On the other hand, non-payment of rent, mortgage and car debts may result in immediate loss of your home or car.


Do Not Pay When You Have Good Legal Defenses to Repayment. Some examples of legal defenses are that goods purchased were defective, or that the creditor is asking for more money than it is entitled to. If you have a legal defense, you should obtain legal advice to determine whether your defense will succeed. In evaluating these options, remember that it is especially dangerous to withhold mortgage or rent payments without legal advice. However, for all debts you should consider fighting back when you have a valid defense.


Court Judgments Against You Move Debt Up in Priority, But Often Less Than You Think. After a collector obtains a court judgment, that debt often should move up in priority, because the creditor can enforce that judgment by asking the court to seize certain of your property, wages, and bank accounts. Nevertheless, how serious a threat this really is will depend on your state's law, the value of your property, and your income. It may be that all your property and wages are protected under state law. Then you should pay this debt only after more pressing obligations.


Student Loans Are Medium Priority Debts. They should generally be paid ahead of low priority debts, but after top priority debts. Most student loans are backed by the United States and federal law provides special collection remedies against you, such as seizure of your tax refunds and denying you new student loans and grants that are not available for other types of loans.


Debt Collection Efforts Should Never Move Up a Debt's Priority. Be polite to the collector, but make your own choices about which debts to pay based on what is best for your family. Debt collectors are unlikely to give you good advice. Debt collectors may be most aggressive to get you to pay debts which you should actually pay last. You can easily stop debt collection contacts and you have legal remedies to deal with collection harassment.


Threats to Ruin Your Credit Record Should Never Move Up a Debt's Priority. In many cases, when a collector threatens to report your delinquency to a credit bureau, the creditor has already provided the credit bureau with the exact status of the delinquency. And, if the creditor has not done so, a collector hired by the creditor is very unlikely to do so. In fact, your mortgage lender, your car creditor, and other big creditors are much more likely to report your delinquency (without any threat) than is a debt collector that threatens you about your credit record.


Cosigned Debts Should Be Treated Like Your Other Debts. If you have put up your home or car as collateral on a loan you have cosigned, that is a high priority debt for you if the other co-signers are not keeping the debt current. If you have not put up such collateral, treat cosigned debts as a lower priority. If others have cosigned for you and you are unable to pay the debt, you should tell your cosigner about your financial problems so that he or she can decide what to do about that debt.


Refinancing Is Rarely the Answer. You should always be careful about refinancing. It can be very expensive and it can give creditors more opportunities to seize your important assets. A short term fix can lead to long term problems.

For More Help See Dealing With Mounting Bills

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Using Low Interest Loans To Reduce Your Debt

Property owners can use home-equity loans (average rate: 7.67%) to reduce their credit card debt.  Investors can use margin accounts with brokerages to do likewise.  Interest on these loans is tax deductible, while interest on credit cards is not.  College students are often able to obtain low interest school loans (financial aid) for living and school related expenses. If you work part-time and live on a tight budget, you may have enough left over from your school loan to pay off your higher interest credit card debt.

Warning: Be careful about substituting an unsecured credit card debt with a secured debt such as a mortgage or home equity loan.
Defaulting on a secured debt could leave you homeless.

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Dealing With Mounting Bills
Stay calm. Pay your rent or monthly mortgage first.  Then pay off your smallest bills.  Remember, the fewer creditors on your back the better.  Next, check with each creditor about penalties for late payments.  This will help you decide which bills have low priority and should be paid last.  For instance, you may be able to miss a payment on your gas, utility or phone bills without penalty. On the other hand, missed payments on your credit card may result in substantial late fees or the loss of your introductory rate.  

If you find that you cannot pay your high priority bills, contact your creditors or mortgage lender at once.  Level with them before it's too late.  Try to work out a modified payment plan with them to reduce your payments to a more manageable level.  If you have paid promptly in the past they may be willing to work with you.  Sometimes, credit card companies will even knock off the interest on your balance if you promise to never again use your card. Even finance companies may be willing to help.  

When a friend of mine once had trouble making car payments, the lender graciously allowed him to tack the payment on to the end of his installment plan. This gave my friend another month to get his finances in order.  While he would still have to make up for the payment he missed, it would be at the end of the loan and without late fees, interest or penalties. 

Don't miss credit card payments if you can avoid it. Late payments show that you are "high risk" and may cause your other card issuers to boost their rates as well. 

To protect yourself against credit card rate hikes, keep a list of credit card accounts, payment due dates, balances and credit limits. If a credit card due date falls at a time of the month when cash is tight, call the issuer and have the due date changed.  Don't wait until your account is turned over to a debt collector.  At that point, the creditor has completely given up on you.  

If you need more help, contact a local credit counseling service.  Credit counseling services offer free or low cost counseling to indebted consumers.  These agencies are in every state and will help arrange a payment plan acceptable to both you and your creditors.  Check with your local bank or consumer protection agency for reputable financial counseling services. 

What To Do When You Can’t Make Your Rent, Mortgage, Utility or Medical Bills 

  1. Don’t Panic. Before your payment is due, find out exactly how short you’ll be. Allow for food, essential medicines, gas, transportation, etc.
  2. Prioritize your debt. For example, it’s better to miss a credit card payment than to miss a rent payment. Call your non-essential creditors to get some type of payment plan or deferment.   It may be that your lender will let you reset your payment date so you have an extra week or two to make the payment. See Also The Credit Card Balancing Game.
  3. Before the payment is due, contact your bank, landlord or utilities company. Never wait until you’re delinquent.  Being upfront speaks volumes of your character. It also shows you’re not a deadbeat and are trying in good faith to resolve the problem. In almost every case this will not accelerate the eviction, foreclosure or cutoff process.
  4. Ask what the specific penalties are for late payments and the deadline for receiving late payments. Make sure to go in person and be very humble and polite with them. Explain the problem, the amount you’re short by and when and how you will try to get the money.  For example: “Landlord, as you know, for the last three years I’ve always paid my rent on time.  Unfortunately I’m unemployed right now and have two children to take care of. I know you have a job to do and that it looks bad if you can’t collect the rent from me. I want you to know upfront that I’m doing whatever I can so you won’t be in a tough spot here.  Right now I’m $500 short on rent. Tomorrow, I will ask my sister to wire me some money. I will also ask my church/synagogue/mosque for assistance.

    On Monday I will contacting the following help agencies “X, Y and Z” (see step 6), which are known to assist those who can’t pay their rent/mortgage or utilities. I will call you within _____# of days to inform you of my progress. Also, I am getting a roommate, applying for temp jobs, welfare, etc., and will do everything in my power so this won’t happen next month”
  5. Ask them if they can make some type of accommodation for you. For example: banks and car loan lenders may allow you to miss a payment and tack the extra payment to the back end of your loan. Credit card companies may change the date the statement is due. Your utilities company may also have a “late payment plan”. Likewise, it’s possible your landlord may waive the “late payment fee” if rent is received within a week or so of the “past due date.”
  6. Call The Rent, Mortgage, Utility or Medical Bills Help Agencies. Write down the name of the agency, the person you spoke with, the date of the call and what they told you. This will help your credibility when dealing with your landlord and other help agencies. Often, the agency will ask what the other agencies are willing to commit to in assistance. The reason is that they’re wasting their money on you if no one else commits and you’re thrown out into the street.   So if you have other financing, tell them. Also ask them “if I could get all the other funding, what is the maximum you’d be willing to commit to?”  If they’re unwilling to give you a specific dollar amount, tell them “Look, every agency is waiting for the others to commit. The bottom line is that if you don’t commit to a specific dollar amount, no one else will either and I’ll be out on the street! Please, just give me a ballpark figure, so I can tell the other agencies.  I promise I’ll make every effort to look for other sources so you won’t be needlessly burdened” Note: you may need to get a late notice from your utilities/landlord or bank before they will help you.
  1. Repeat process with all friends, relatives and help agencies.
  1. Still Short? Find out by how much and then tell each of your assistance groups that if they give just x dollars more, your problem will be solved. Also learn how to Cut Down on Food Costs.
  2. Still Short? For immediate cash pawn your TV, jewelry, silverware and other non-necessities. Pawnshops charge ludicrous interest rates. (300%).  But it's quick, instant cash and you can always pay them off and redeem your stuff later.  Remember, the goal here is to keep you and your
    stuff from being tossed out in the street. See also Creative Ways To Earn Extra Money.
  3. Still can’t get the money? See Evictions, Avoiding Foreclosure and Free or Low Cost Lawyers
  4. To avoid this next month, get a roommate, cut down on movies, eating out, and other non-essential expenses. Call your home and auto insurers to raise your deductibles so you can get reduced monthly payments. Call your phone company and ask for the best plan for your needs.  Then ask your credit card company for a lower interest rate (often they'll drop it a few points just by asking). Also learn how to Cut Down on Food Costs.

    Bag your lunch and sell any items you absolutely don't need. Also look for temporary work or a part time job on evenings, nights or weekends. And seriously consider moving to a less expensive place. If you have to, move in with mom or a relative until you get your head together. See also Creative Ways To Earn Extra Money and Credit Counseling.

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Creative Ways To Earn Extra Money

Creative Ways To Earn Extra Money (Google)
Tips on earning fast money.

$ Through Legitimate Surveys
You can provide product research on sites like SurveySavvy.com for anywhere from $1 to $15 per survey.

Legitimate Work From Home Opportunities
Famous consumer advocate Clark Howard says these are legit. But be cautious just in case.

Work At Home Doing Routine or Menial Tasks For Money
Earn money from home at school or in the library! Use there search engine to sort based on highest price offered per job, job title or most recent postings. Site allows you to choose quick or long term tasks and get money for doing them.

Amazon Mechanical Turk is based on the idea that there are still many things that human beings can do much more effectively than computers, such as identifying objects in a photo or video, performing data de-duplication, transcribing audio recordings, or researching data details. Traditionally, tasks like this have been accomplished by hiring a large temporary workforce (which is time consuming, expensive, and difficult to scale) or have gone undone.

Earn a quick $4 on each task performed. Make money off your ability to do anything from retouching photos to singing. First time users, click on HOW DOES IT WORK?

Back to Can’t Pay Your Rent, Mortgage Or Utilities? 

Selling Items You Don't Need
Consider putting the items on consignment so someone else can deal with all the hassles of selling. For places that sell on-line, search Google for local sellers that sell your specialty item. For Example: to find a local seller of computers type in consignment online computers Atlanta or consignment online computers Dallas.

See Basic Tips On Consignment

Back to Can’t Pay Your Rent, Mortgage Or Utilities?  (Consumer-SOS)

Bartering For Goods or Services When You have No Cash
You can improve your chances for finding someone willing to barter with you if you focus on an equitable trade, are upfront and detailed with barter terms and are willing to get creative. Check out the sites below.

Barter Quest

Choose your city and look for Barter which is usually under their for sale section.

Where Else To Barter Your Goods & Services (Google Search)

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Negotiating With Creditors

Negotiating With Creditors (Before Settlement)
What every debtor should know before negotiating with their creditors.  Learn about the risks and realities of being in debt, the importance of statutes of limitation, and how long a debt can remain on your credit report.

Negotiating With Your Creditors (During Settlement) Negotiate your loan amount and your credit rating!  

Paying Off Your Debts Once You've Settled
Essential strategies for paying off your debt after you've settled with your creditors.  

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Consolidating Your Debt

Debt Consolidation
The Pros and Cons of consolidating your debt. Also has articles and an interest calculator.

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Related Topics
Home Matters
Student Loans

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Credit Counseling Services

Pros & Cons of Credit Counseling (Google)

National Foundation of Consumer Credit Counseling
With more than 800 agency offices across the country, they provide counseling and education services on budgeting, credit, and debt resolution.

American Consumer Credit Counseling
This organization will negotiate with your creditors, cut down the interest on your debt and consolidate your bills into one easy monthly payment which can be electronically debited from your bank account.  They work with over 40,000 creditors nation wide and all correspondence with them is done by phone not by walk-ins.  To qualify for this free service you must have over $2000 in unsecured debt which can include unpaid medical bills, personal loans or credit card obligations. 

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Managing Your Debt