The U.S. debt clock ticks at unprecedented speed, mounting over $68 trillion in total U.S. debt. That translates into over $62,000 of debt per U.S. citizen, and nearly $166,000 of debt per American taxpayer. Personal debt also has reached unprecedented numbers. Credit card debt continues to rise although there are positive signs of recovery, such as the recent boom in the stock market. The housing market seems on an upswing, and although disposable income is higher, so is personal debt.
Some startling statistics:
With these kinds of statistics, how can Americans get out of debt and avoid bankruptcy?
Get in the Mindset to Reduce or Eliminate Personal Debt
The first step is to evaluate your financial situation and evaluate it honestly. When mounting debt spirals out of control, many turn to debt consolidation for debt reduction or settlement. Reputable debt consolidation programs do not charge fees other than nominal administrative fees, which are often waived in extreme hardship cases. Doing business with debt consolidation and settlement companies that charge you to do their work is a red flag to run.
If debt reduction is something you want to handle on your own, there are several methods you can try. First, stop unnecessary spending. Write down your debts and your income. Don't leave anything out. If you have no disposable income left over after your monthly payments, you may want to consider debt consolidation. If you have disposable income after your monthly bill payments, using the snowball method of paying them off may work for you.
The Snowball Method
First, you pay off the lowest balance you have. Then you roll that payment into your minimum monthly payment of the next lowest balance. Once that is paid off, roll that payment into the next lowest balance and so on. It will take some time, but you will eventually pay off your highest debt providing you don't create more debt.
Debt Consolidation
You will meet with a debt counselor who will go over your debt and income with you. Hide nothing. Together you will determine what you can afford to pay your creditors. Your debt counselor will contact your creditors and set up viable payment plans. Some creditors will work easily with you. Some will not. Be prepared that some creditors will not work with debt consolidation companies. Debt consolidation programs may take 3 to 5 years to complete the process.
Debt Settlement
If you feel confident in your negotiating skills and have a basic knowledge of consumer debt protection rights, then you may be able to contact your creditors and negotiate an equitable settlement. Propose nothing over the phone, and list all your terms for the proposed settlement in writing. Make sure that you also get a letter from the creditor stating that they will contact all three credit bureaus when the debt is settled in full.
Bankruptcy
Bankruptcy is a last resort to pay your debt. Bankruptcies stay on your credit record for up to 10 years. Although the stigma of bankruptcy isn't what it used to be, it does damage your credit and you should avoid further damage if possible. Note that late payments and collection activity stays on your credit reports for 7 years. Inquiries into your credit that you solicit stay on for 2 years. Bankruptcy courts now mandate that you do through credit counseling before bankruptcy is initiated. Bankruptcy rules have tighter controls due to the economy, so you can't simply apply for a chapter 7 "straight" bankruptcy and get it. If your income and assets fall over a certain threshold, you must apply for a chapter 13 "reconsolidation" bankruptcy plan. In this plan, you make payments to the court. A trustee divides the payments and pays your creditors.
Do Nothing
The worse course of action is to ignore the phone calls and payments. Creditors can hound you up to your state's statute of limitations. If you talk to your creditor, those statutes restart. It can be a nightmare to be served with court papers out of the blue that you have been sued for your debt and now a lien is placed upon your home. U.S. debt statistics aren't likely to get better soon. For debt relief that works, be proactive.
For more information, contact companies like http://timgeorgelaw.com.
Share8 May 2017
Just as there are laws to protect us on the roads, there are laws to protect our families. Whether you are fighting for the right to see your children, or are in the beginning stages of a divorce, a lawyer can help. There are many laws and stipulations that can have a serious impact on the outcome of any family legal situation. Having a lawyer working at your side to get through a difficult time is the only way to ensure that your rights are fully protected. On this site, you will learn about some of the family laws that could be impacting your life today.