Every batch of mail is bound to include a late bill notice, a letter from a collection agency, a utility bill with a past due amount or even just a regular old credit card statement with a balance that’s way too high.
When you see how much you owe, and even worse how much interest you 're paying, it’s common to feel instant panic and depression. One study found that people who struggle to pay their bills each month experience twice as much anxiety and depression than those who don’t.
I’d bet people with debt are probably the only people in America who really, really wish mail wasn’t delivered on Saturdays.
But sometimes, in that stressful …show more content…
“You meet someone in person, on the phone, or online to talk over your financial problems for about an hour to start with.”
When a debt management plan is established, you make a monthly payment to the credit counselor, who then pays off your creditors.
Here 's how credit counseling differs from debt settlement:
Most debt management organizations are non-profits, although they may charge a fee for their services.
They encourage you to continue making minimum payments to your creditors while they work out a monthly payment you can afford.
They have agreements already in place with creditors, which ensure they won’t charge you late fees while you pay off what you owe.
Credit counselors don’t negotiate an overall reduction in the amount you owe creditors, which makes the creditors more likely to work with them.
They do negotiate for lower monthly payments, a longer repayment period, and lower interest rates.
Debt management won’t hurt your credit score, but it will be more difficult to apply for new credit.
How do you know when it’s time to get help with your debt?
One rule of thumb is that your monthly payments on debts that aren’t related to housing shouldn’t exceed more than 20 percent of your take-home …show more content…
Some warning signals you 've got too much debt include:
You have to use your credit card to buy groceries.
You put off paying gas or electric bills because there are minimal late fees associated with past due utility bills
Your heart races when you pay your bills
If any of these sound familiar, it may be time to pick up the phone and get some help in the form of debt management or debt settlement (although we hope after reading this article, it’s clear debt settlement doesn’t offer much).
And remember that you can always negotiate with your creditors without any help from a third party.
Here are some sample letters you can use to reach out to credit card companies in the hopes they’ll renegotiate the amount you owe them, or the terms of the