Debt Management & Consolidation

Assessing Your Credit Score
Establishing & Maintaining a Favorable Credit History
Debt Management & Consolidation
Repairing a Negative Credit Report

For one reason or another, many Americans are knee-deep in debt, but they don’t have to remain that way. There is help, but you must be an aware consumer, and be willing to work at it step by step. The Federal Trade Commission (FTC) has a few resources for consumers, and in Knee Deep in Debt, they suggest relieving your debt burden by setting up a budget for repayment and contacting your creditors to work out an alternative plan to pay off what you owe. Most creditors will work with you if the situation is temporary and they believe you are acting in good faith.

Debt Management

If you lack the discipline to work out a debt management plan on your own or your creditors refuse to work with you, you might consider credit counseling. However, be aware that not all credit counseling organizations are ethical or legal. Be sure to inquire about hidden fees and/or donations. Reputable credit counseling organizations will have trained, certified staff in consumer credit and debt management, and offer free educational materials. Check the FTC website and resources listed below for information on differentiating between a scam and a reputable organization.

Debt Consolidation

Though not advisable in all situations, another approach to managing your burden of debt is to consolidate what you owe into one loan through a second mortgage or home equity line of credit. You use your house as collateral, so if you still can not make your payments, you risk losing your home. As with organizations that help with debt management plans, be aware of scams and make sure you choose a reputable lender.

The best course of action, though, is to work with your creditors and budget wisely so that you don’t add to your debt with high fees and interest rates.

For more information on finding and interviewing credit counselors and questions to ask yourself about debt management, go to the FTC Credit website information sheet, Fiscal Fitness.