Just because you are having debt problems does not mean that you necessarily have to see a credit counselor. There is no law outside of a bankruptcy filing that requires you to do so. And yet, in my many years of legal practice and civil advocacy, I have been amazed at how many people were thwarted or frustrated in their attempts at trying to help themselves.
Within debt consolidation there is an ideal way to represent yourself. On the other hand, there also are circumstances in which you should seek help. Let us set the record straight:
- Legitimate do-it-yourself offers do not turn into attempts to sell an expert’s books or programs.
- Legitimate do-it-yourself debt projects do not involve giving private information to a stranger.
While it may seem obvious, people sometimes fail to realize that do-it-yourself debt management saves you money only if your debt actually is managed. In other words, one can take many worthwhile ‘self-help’ steps when it comes to debt consolidation, but real action must follow all of your planning. There are many different strategies for approaching debt consolidation, and some will work better for certain types of debt than for others. The following chart should be a helpful guide:
| Step One | Gather ALL of your debt records, noting amounts, due dates, and interest rates | Write own your “must pay” expenses | Write down less important but pressing debts | Obtain your credit report Go To Step 2 |
| Step Two | Negotiation with creditors: contact your creditors | Explain you are exploring your best options | Inquire whether the creditor is able to decrease the amount desired as collectable | Go To Step 3 |
| Step Three | Gather ALL of your expected annual income records | Based on debt/ expenses & negotiation with creditors, develop monthly budget | Determine which items would be best handled by long-term payments or items for consolidation | Go To Step 4 |
| Step Four | PLAN on your ACT* for payment based on a monthly budget | Monitor the plan’s success | Do not divert any savings into new expenses | Go To Step 5 |
| Step Five | Long-term Equity and Savings Plan | Consider accelerating payments as some budget items are paid off | As equity position improves, repeat Step 2 | Determine alternative debt strategies for difficult items (e.g.,debt management plan/bankruptcy, or home equity options) |
You probably can make a pretty accurate guess about you and your family’s financial strengths and weaknesses. Many people, for example, have difficulty forming realistic payment and disbursal plans and could benefit from professional assistance in this area. Even though there are many steps you can take yourself, you should seek help with those areas in which you lack confidence, information, skills or time.
Before forsaking the help of a professional, compare the nominal cost of spending some money (perhaps $20 per month) to a consolidation or counseling company versus your own ability to develop, manage and apply your debt management skills. Most people decide that their best option is somewhere in the middle. Consider signing up for credit counseling only until you get the ball rolling – and do not wait until you are in over your head. With a little bit of help, you can master debt management.
*You can access the debthelp.com debt consolidation article "PLAN on Your ACT".
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