Lenders Also do Debt Help
When you fall on hard times, it’s best to go to the source for debt help. You may think that you should hide your need for debt help from your lenders – nothing could be further from the truth. They would rather work with you to get things solved. It is expensive for them to take legal action against you.
Take your mortgage loan for example. Lenders have a variety of ways to offer debt help when borrowers run into cash crunches. They offer debt help programs – sometimes referred to as “workout” or "loan modification" programs – to get you through tough times. They may allow you to skip payments temporarily, make smaller payments, or restructure your loan altogether (by extending the term, for example).
Mortgage lenders and credit card companies alike will offer debt help if you are proactive. Call them before you get too far behind – they’re more likely to work with proactive borrowers that are not too deep in the hole. Don’t wait until it’s too late.
Beware of Debt Help Scammers
The world of debt help is full of all kinds of characters. Some of them genuinely want to help you. Others offer “debt help” services that do anything but help you. These organizations might charge an upfront fee before offering any real debt help. Don’t be fooled by claims that you’re dealing with a nonprofit organization. The Internal Revenue Service (IRS) has been auditing so-called nonprofit debt help organizations and revoking their nonprofit status. In 2006, about half of those debt help companies audited failed the test.
Some debt help shops are simply criminal. They specialize in bilking uneducated consumers out of the little money available in their budget. They might offer debt consolidation programs in the form of home equity loans. However, they fail to disclose fees and risks – and they might not even mention that you’re putting your home on the line.
Debt Help vs Credit Help
You should also be wary of debt help programs that promise to eliminate your debts. While these may help you today, your credit score may suffer for years to come. Bankruptcy, settlements, and some payment plans can all negatively affect your credit. Again, your first step should be to contact your lenders and see if they can work something out – without it showing up on your credit reports.
Do-it-Yourself Debt Help
You are the person that can help yourself the most. You’ve got the most skin in the game, so you’re more motivated than anybody. Likewise, there’s no doubt that you will look out for your own best interests. Before spending time and energy looking for a debt help service, see if you can make a dent in your debt on your own.
Many debt help services offer to do things that you can do yourself. You can call your creditors and negotiate with them – you’ll probably do a better job because you truly know how much you can afford to pay. By taking an active role, you’ll know how the system works and what you need to do to get out of debt.
The most important piece of do-it-yourself debt help is managing your budget. If you can find ways to cut costs or increase your income, you’ll have your problems solved. Track your spending using budget worksheets like those found on About.com’s Financial Planning site. You might also try a spreadsheet such as PearBudget. If you really track your budget, it can only help.
