How to Deal with Your Money Problems: A Step By Step PlanMay 14, 2012
Unlike many other problems, debt and money problems always seem to hit fast and hard. Most debtors do not notice when they are falling behind slowly. They miss one or two payments and then suddenly they have the worst credit score imaginable. Once a person falls underneath the heavy weight of overwhelming debt, it may seem like there is no way out. Fortunately, that belief is a falsehood. Almost anyone can get out of debt and solve his or her money problems. The process might be lengthy, but all it really takes is some calculations, professional assistance, and a strict financial plan.
Admit There is a Problem
The majority of consumers with debt problems are in as deep as they are because they were in denial for so long. The first step in the financial recovery process is admitting the problem exists and accepting help. If a person can’t make it from one paycheck to the next without going broke or borrowing money, he or she has a debt problem and reconstruction is necessary. Once the debtor admits that he or she needs help, that person can successfully move toward fixing it.
Stop Using Credit
The only way one can be successful in getting out of debt is to cease incurring debt. It is impossible to return to financial health if the debtor is still maxing out his or her credit cards. The individual must show strength by either canceling or cutting the credit cards. There should be no more added debt until he or she has gotten back on track and in good standing with all his or her creditors.
Choose a Repair Service
Several debt repair options are available for consumers. The method one chooses depends on the financial resources available. The debtor should calculate his or her disposable income to come up with a figure to help with the decision. Debt consolidation is a great service for people who have enough disposable income to maintain one monthly lump sum payment. Alternatively, bankruptcy is for people have little or no disposable income. Anyone who finds that he or she does not have enough money to pay his or her creditors should see an attorney for bankruptcy.
Start a Program or File a Motion
Once the consumer decides on his or her course of action, the next step is signing up for a repair program or filing for bankruptcy. The attorney can file the appropriate paperwork for bankruptcy. Once the lawyer files the petition, creditors must cease all harassment and collections attempts. The debtor receives instant protection until the bankruptcy court makes its ruling. If the court grants a chapter 7 bankruptcy, the debtor is excused from debt for the most part. However, if the debtor has enough disposable income, the courts may rule a chapter 13. In a chapter 13 bankruptcy, the debtor must pay back a portion of the proceeds.
Practice Good Habits
The last step in the process of solving money problems is practicing and continuing good habits. A person who receives a bankruptcy ruling should take time out to obtain credit counseling and guidance to avoid future rulings. A person who has entered a debt consolidation program should continue to make timely payments for the duration of the repayment period. A smart debtor will also save money during the reconstruction process. He or she might opt to work more hours or pick up odd jobs for extra cash. Creating a financial cushion will help to avoid future money problems.