Your Debt Options

If you are facing large debts and financial difficulty, there are a number of options and resources available to help you.

These options can range from simple solutions, like budgeting, to the last resort option of bankruptcy. Based on your level of debt, your level of discipline, and your prospects for the future, you'll have to determine which is the best option for you.

Self-Help - Self-help may be your best option when dealing with debt and credit problems. Develop a budget to help realistically assess your income and expenses, and to help curb excessive spending. Your public library has information about budgeting and money management techniques. Low cost financial counseling services are also available in most communities. You may be able to contact credit card companies directly to negotiate modified payment plans. If your credit history is less-than-perfect, time and responsible money management are your best resources. Be sure to contest any incorrect or out-dated information which may be negatively affecting your credit.

Credit Counseling - If you're unable to resolve debt problems on your own, consider contacting a credit counseling service; they can help eliminate much of the stress of dealing with financial problems on your own. These services will help you establish a debt repayment plan and may help you reduce repayments with creditors. Some credit counseling services charge little or nothing for managing the plan, while others may charge a monthly fee.

Debt Consolidation - You may be able to lower your cost of credit by consolidating your debt through a second mortgage or home equity line of credit. These loans may add up cost-wise, but may alternatively provide certain tax advantages not available with other kinds of credit. This option requires careful consideration, however, as these loans may require your home as collateral.

Credit Repair Services - Credit Repair companies offer help in cleaning up your credit report. For a fee, they can help you dispute incorrect or inaccurate information in your credit history which may be damaging your credit rating. Be aware, however, that no one can legally remove accurate and timely negative information from your credit report. Also, keep in mind that everything a credit repair clinic can do for you legally, you can also do for yourself at little or no cost. Ultimately only time and a conscientious effort to repay your debts will improve your credit report.

Bankruptcy
Turning to a third-party or business that offers help in solving debt problems may seem like a perfect solution when your bills or credit become unmanageable, but you need to be cautious. Before you commit to anything, be sure to:

- find out exactly what services the business provides and what it will cost
- get everything in writing; never rely on oral promises alone
- check out any company with your local consumer protection office and the Better Business Bureau in the company's location. They may be able to tell you whether other consumers have registered complaints about the business.

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