Doctor Debt - Debt Management

Debt Management

Doctor Debt Recommends Debt Management

Your financial problems are probably from too much debt or your inability to pay balances. Sometimes a credit counseling agency may recommend a debt management program or one particular debt management service, but a debt management program alone should not be used as your credit counseling. Most debt management programs usually require you to make monthly deposits to the credit counselors, who then pay your debt. Some debt management services can get your creditors to lower interest rates or waive fees (or both, if you're lucky).

Attention Patients! The Debt Management Session Starts Now!!!

The first step in debt management is to take personal responsibility for your debt. Doctor Debt suggests writing down what you spend vs. how much you actually make. When listing expenses, be sure to include:

Fixed expenses (expenses that stay the same every month; i.e. mortgage, rent, car loans)
Variable expenses (i.e. clothing and entertainment)

You want to keep track of your spending patterns and learn how to stay within your budget. Once the list is complete, go to your public library for books on money management. In addition, many universities, military bases, credit unions, and housing authorities operate nonprofit financial counseling programs. Use the debt management resources in front of you. They are usually free!

Doctor Debt Helps You Crush Collectors!

Most people with debt have to deal with annoying creditors. Many find themselves paying only the required minimum amounts on their credit card debt, while noticing that the actual balance never seems to decrease. In the long run, credit card debt puts you at a loss with your overall credit score. Debt management starts with initiative. Doctor Debt recommends contacting creditors as soon as you realize you cannot pay. You may be able to work out a payment plan before they turn you over to debt collectors. Debt management does not mean you have to rely on an outside agency to talk to creditors. If you are passed to collectors, you still have rights. According the FTC, you can enforce the Fair Debt Collections Practices Act. This is a federal law that sets guidelines for when a debt collector can contact you. For example, creditors:

May not call before 8 a.m. or after 9 p.m.
May not call at work (collector must know the employer doesn't approve)
May not harass or make false statements
Must honor any written request from you to stop contact

Of course, if you enlist the help of a debt management company, creditors cannot call you at all.

What Are The Alternatives?

Many of Doctor Debt's patients have used alternatives to self-budgeting for debt management. Cost of credit can also be lowered by consolidating debt with a second mortgage or home equity credit. However, if you cannot meet the payment you can lose your home. Although consolidation loans may provide certain tax advantages that are not available with other kinds of credit, their overall cost can add up. Personal bankruptcy is the last resort in debt management.The results of bankruptcy are long term. Bankruptcy stays on your credit report for 10 years, making it difficult to obtain credit, buy a home, get life insurance, or sometimes even get a job. Doctor Debt suggests avoiding bankruptcy as a route for debt management if possible.Try a different debt management solution like one of the other alternatives suggested on this page to achieve full debt recovery.