How to manage your debts

In the days when credit was cheap, anyone with a secure job paying a check every month could borrow. There were still millions on or below the poverty line, but the majority in the US could buy what they needed and then some. People did still get into trouble. But, mostly, banks and finance companies were forgiving. They just added a penalty or two, and increased the interest on what was owing. Life was only rarely interrupted by bankruptcy. Today, people live from paycheck to paycheck. Unemployment threatens everyone, even the middle class. Foreclosures and evictions mean that people are no longer secure in their homes, and bankruptcies are more routine. Some will get too deep into debt and it’s not their fault. There are accidents and illnesses. With the recession, millions have been thrown out of work. Their problems are not of their own making.

The recession is more than a year old and anyone who has not changed their ways is either seriously rich or deluding themselves. Looking around the bookstores still in business, there are new books and magazines offering helpful advice on how to cope. There are radio and television programs with experts talking good common sense solutions. There’s even the internet with useful articles like this. People no longer have ignorance as an excuse. Those Chicken Littles whose problems are self-inflicted will get no sympathy when the sky falls on them. But those who have used the internet or professional counselors to get guidance on how to manage and consolidate their debts are far more likely to get a constructive response from lenders. So where should you start? There are a wide range of Consumer Credit Counseling Services, legal aid and other non-profit groups prepared to offer advice and help to reduce indebtedness. But a word of warning — many dishonest people have been setting up in the counseling business to take the fees and leave the "suckers" deeper in debt. Before you approach anyone for help and advice, check them out. Make sure they are members of a reputable regulatory body before you sign up for their programs.

Debt management is difficult, but everything is possible if take a responsible and disciplined approach. At this point, you run into a distinction between personal management and the renegotiation of liabilities with your creditors. There are many things you can do to save money on your household budgets and make it easier to keep your payments up-to-date. But there comes a point when you cannot manage your own way out of the problem. A professional counselor will always look at the big picture, and aim to consolidate and simplify all your liabilities into a package that’s easier to manage. But one basic rule always applies. Unless you are literally penniless, always pay something to your creditors. Even if you have a counselor trying to negotiate a solution, pay something. It shows good will and a responsible attitude to your liabilities. That, more than anything else, is going to get you through to a successful conclusion and is our debt settlement tip of the day.