Having trouble
paying your bills? Getting notices from creditors? Are you worried
about losing your home or your car? You're not alone. Many people
face a financial crisis some time in their lives. Iit can seem
overwhelming, but it can be overcome.
If you're
in financial trouble, consider realistic budgeting, credit counseling
from a reputable organization, or debt consolidation. You can
learn more about which companies we like by navigating the links
at left: if you're looking for quick recommendations, we
recommend Debt Advocates
for credit counseling and CreditandDebt.com
for debt consolidation.
But let's look at options first.
Managing
Your Auto and Home Loans: Your debts can be unsecured
or secured. Secured debts usually are tied to an asset, like your
car for a car loan, or your house for a mortgage. If you stop
making payments, lenders can repossess your car or foreclose on
your house. Unsecured debts are not tied to any asset, and include
most credit card debt, bills for medical care, signature loans,
and debts for other types of services.
Most automobile
financing agreements allow you to refinance your car
through a number of lenders, including Household
Auto ,
E-Loan ,
Driver
Loans
and
Capital One Auto Finance. 
If you're
finding it difficult to make your house payment every month, one
option is to refinance the house in order to obtain a lower monthly
payment. Refinancing a home is much easier today than in the past:
often, refinancing your home is just a few clicks away. Reputable
companies such as Low-Cost
Lending ,
E-Loan ,
and
GoApply.com all can initiate refinancing from their website
in minutes.
Credit
Counseling: If you think you may not be disciplined enough
to dig yourself out of debt alone, consider contacting a credit
counseling organization. There are many reputable credit counseling
organizations that will work with you to solve your financial
problems. Some of the top companies include Debt
Advocates,
American
Consumer Credit Counseling ,
and American
Debt Resources, Inc.
Most credit
counselors offer services through local offices, the Internet,
or on the telephone. If possible, find an organization that offers
in-person counseling. Many universities, military bases, credit
unions, housing authorities, and branches of the U.S. Cooperative
Extension Service operate nonprofit credit counseling programs.
Your financial institution, local consumer protection agency,
and friends and family also may be good sources of information
and referrals.
Reputable
credit counseling organizations can advise you on managing your
money and debts, help you develop a budget, and offer free educational
materials and workshops. Their counselors are certified and trained
in the areas of consumer credit, money and debt management, and
budgeting. Counselors discuss your entire financial situation
with you, and help you develop a personalized plan to solve your
money problems. An initial counseling session typically lasts
an hour, with an offer of follow-up sessions.
Debt
Consolidation: You
may be able to lower your cost of credit by consolidating your
debt through a second mortgage or a home equity line of credit.
Remember that these loans require you to put up your home as collateral,
so understand that it's extremely important for you to make your
payments on time!
Debtworking
is familiar with a variety of reputable lenders for both debt
consolidation, home equity loans and home equity lines of credit.
For your reference, here are some of the ones we like:
The costs
of consolidation loans can add up. In addition to interest on
the loans, you may have to pay "points," with one point
equal to one percent of the amount you borrow. Still, these loans
may provide certain tax advantages that are not available with
other kinds of credit.
Develop
a Budget: An important step toward taking control of
your financial situation is to do a realistic assessment of how
much money you take in and how much money you spend. Start by
listing your income from all sources. Then, list your "fixed"
expenses — those that are the same each month — like
mortgage payments or rent, car payments, and insurance premiums.
Next, list the expenses that vary — like entertainment,
recreation, and clothing. Writing down all your expenses, even
those that seem insignificant, is a helpful way to track your
spending patterns, identify necessary expenses, and prioritize
the rest. Also,
software programs (we recommend Quicken
Basic or Microsoft
Money) can be useful tools for developing and maintaining
a budget, balancing your checkbook, and creating plans to save
money and pay down your debt.
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