How To Get Out Of Bad Debt In 2011
When stuck in a bad debt situation, it's never too late to take action
. The important thing is to know the right steps, created a doable plan and work towards your goal. In this article, let us talk about the ways on how you can get out of bad debt starting today.
Know your debts. Before doing anything, the first thing you should do is to know exactly how much you owe with each of your creditors. Order a copy of your credit report from the three major credit bureaus to see the real status of your debts. If this is your first time this year to order your report, you can get one for free from each bureau by visiting Annualcreditreport.com.
Once you have report, make sure that all your charges are correct. If you find unauthorized charges or charges that have already been paid, you should call the creditor involved to request for corrections. You should also send a dispute letter to the credit bureaus so that an investigation can be started. After 30 days, you should receive a response from the bureau. If your complaint is valid, you will receive an updated copy of your report free of charge.
Plan your next action. It's crucial to plan what your next step would be, depending on how serious your debt situation is. In some cases, it might be necessary to take out a debt consolidation loan to be able to pay your creditors.
Save for tomorrow. No matter how big or small your income is, you should set aside a portion of it for your savings. Find ways to cut back on your spending on use every cent to build your savings account and emergency fund. Financial experts recommend building up a fund that should be enough to support you and your family for at least six months.
Avoid new debts. Avoid incurring new debts that can add burden to your repayment obligations. Do you own credit cards? If yes, don't use it on new purchases. Instead, charge your utilities such as electricity, gas, cable, or internet to your credit card to keep it from closing out. Arrange for automatic payment to avoid missing your due date.
Watch out for debt relief scams. When a person is in a desperate situation, they can easily fall prey to predatory lenders and debt settlement scams. If you want to get credit counselling, find an agency that is accredited by the government, the NFCC (National Foundation for Credit Counseling) and other national organizations. Check the agency's background and track record of service. Understand the exact services you can expect if you sign up for counselling.
Avoid debt relief companies that promise to automatically delete your bad credit off your report in exchange for cash. Some counsellors may also immediately recommend that you enrol in a Debt Management Program without first taking a look at your financial situation. Such agencies are only after one thing - making profit from people who are badly in need.
by: Shelly Evans
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