Debt relief service

Once you have taken stock of your debts, before you look for an affordable loan, the first thing you should do is contact your creditors – that is, all the organisations you owe money to (including the gas, electricity, water and telephone companies). You can do this on your own, or with the help of a debt adviser.

The earlier you write to your creditors explaining that you are in financial difficulty, the more flexible and helpful they are likely to be. If you have already started to receive reminders and/or final demands, do not ignore them – get in touch with the company as soon as possible to explain your situation. Your creditors may charge you some of the costs they incur in chasing arrears, so you risk exacerbating the problem by doing nothing. You are also more likely to face court action.

Negotiating

To most people in serious debt, the very thought of asking their creditors to agree to freeze interest, lower their monthly payment or write off a significant part of it can be extremely daunting. It may surprise you to learn that there are many useful tips and strategies that you can employ in your negotiations with your creditors.

If you are being pressurised by creditors, who are issuing threatening letters and making phone calls demanding money, it is easy to cave in to their demands and offer them everything that they are asking for – even if you have no way of following through with your promises. Do not be bullied into doing so. The first step in the process of negotiation begins with writing a letter to the creditor setting out your position and making promises you can keep.

Writing an effective letter

When you write to your creditors, always include the creditor’s name and address, your name and address (and your partner’s name if you both signed a joint credit agreement) and your account number. If a creditor has already written to you concerning non-payment, include the creditor’s reference number. Attach a copy of your financial statement to show why you cannot pay or to support an offer of reduced payment.

If you have no money with which to make payment, or you are offering only a token sum – for example, you can pay only

Chris Tapp, UK deputy director of Credit Action, said: “Retirement should be a time for some well-earned relaxation, but for all too many it is a time of financial stress… when we consider that inflation hits the over-60s hardest, pension provision is looking increasingly shaky, and we have moved away from a savings culture, we can see that the levels of debt amongst the over 60s, as well as being a serious issue now, is one which is only likely to get worse.”

Though the above was discussing senior debt issues in the United Kingdom, the same issues apply in the U.S. and the world over.

According to a study done by the New York based research firm, Demos, “The debt increase is particularly sharp during the first years of retirement… people aged 65 to 69 saw their credit card balances grow by 217%….” And according to research by Bankruptcy Project at Harvard, retirees are now the fastest-growing segment of bankrupt Americans. As a certified pre-bankruptcy counselor, I can agree with the Harvard study and that a very large portion of my phone-ins are seniors.

So why are seniors being hit so hard? When you consider that retirement income is usually less than a working income (and often fixed), increased inflation affects purchasing even basic commodities… and it can be staggering. Consider the increase cost of oil. Heating oil is bad enough. But think about the cost of vehicle operation besides just your car. Everything must be transported and the increased cost of transporting even basic commodities has to be made up from someplace. The only place it can come from is the consumer’s pocket. Everything you purchase has an increased cost. That can of peas or the new sofa costs far more than it use to along with the gasoline to go purchase it.

But there is more. The younger generation grew up with wide-open credit but the senior did not. Many times there is a cultural difference between someone who grew up with credit cards and someone who did not. Many seniors are bringing credit debt into their retirement with retirement dollars straining to meet the budget.. Add to that increased late fees, over the limit fees, even back charge fees and you have a potentially catastrophic arena.

But there is also a longer life, increased health costs, deteriorating health and a credit card industry willing to open the doors of credit to nearly anyone that’s still breathing. When you are desperate, it is not an implausible thought that a credit card might look like the solution even for basic purchases. Unfortunately, all a credit card does is increase the inevitable. Like everyone else, seniors are paying for today with tomorrow’s dollars… dollars that are definitely shrinking form a fixed income.

So what can be done? The obvious answer is to plan early… the earlier the better. But what if early planning did not occur. Then tragically the only solutions left are the exact same solutions for every other consumer- increase income or decrease expenses.

Ahhh but therein lies the catch. How can you increase income when it is fixed? Often times this can be accomplished through imagination and creativity. Perhaps the senior can develop consulting opportunities or an online business. Perhaps something can be sold. Hundreds of additional ideas can be gleaned form online resources, written publications, and senior advisors. The point is, plans must be developed and enacted.

If increasing income is not an option then the only recourse is decrease expenses. Call creditors and request a decrease in interest rate. This may sound absurd but it is done every day. There are also scores of magazines offering ways to stretch your dollar. Similarly your favorite search engine will produce more frugal sites than you can ever read. Each of these sites informs the reader of ideas to save money and to accomplish exactly what you are already doing but for less.

Okay. You can’t increase your income nor stretch your dollar any further than it is already. Now you are down to credit counselling, debt management programs or debt negotiation. I strongly encourage you to be very careful in your selection of any of these avenues. In fact I encourage you to read other materials by this or similar consumer advocate authors, about each of these options. Tragically there are many unscrupulous agencies that take advantage of opportunities especially at the expense of seniors. Find out what the track record of the perspective firm. What is their completion rate? What does the Better Business Bureau have to say about them?

If the proper option has still not appeared, there is only one other recourse… bankruptcy.

Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years.

By: Michael Killian

Specialists on money management analyze the ways how common consumers get into debt and determine basic plans out of debt.

No new debt. It stands for sure that financial and psychological burden of being in debt causes continuous emotional stress. It reflects us greatly, makes us powerless, irritated, depressed and helpless. So, you have to make the commitment to yourself and your family that together you will take on no new forms of debt. It’s not a good habit to live beyond one’s means. It’s high time to break this pattern.

Track Your Money. Don’t wait getting deeper in debt. Put all efforts together and make yourself to write down your monthly income (job, savings, investing, etc.) and expenditures (mortgage, electric, water, gas etc.), including every penny (even seemingly unessential). This procedure should be done regularly, at least once a month for you to know where your money goes. This will help you to count exactly how much you have to live on, how much you have to pay out each month and exactly how much you have to find each month to pay debts. It’s proven that with no such writing people spend to 10% more that they can afford.

Negotiation. Consider writing to your credit card company or loan company and asking about renegotiating the terms. Asking does not hurt. If you don’t ask you won’t get. There is no guarantee that lenders will agree to lower interest rates or agree to accept a lower monthly amount. But you need to explain your financial situation in details and the action you’re taking to overcome difficulties. Having heard this, lenders may give you a chance to get better interest rates and better payment terms.

System of payment. The main clue to achieve freedom from debt is to work out debt payment system that really works and to follow it strictly. Once you have a clear picture of what has to be paid and to whom each month and exactly how much money you have to pay, you can make the list of debts in accordance with interest rates. The highest interest rate debt should take the first place in your list. And every effort should be done to pay it first. Use all cash possible, savings, benefits from investing or whatever. All the other debts should be paid with minimal amount of money. Any spare money you have left at the end of the month use it to pay off an extra slice of debt number one. After you have paid the debt number one use the same policy with the next highest interest rate debt.

Once you finally get debt free remember those efforts you’ve made to reach it. Do you want to try it again? When you stand on solid ground of finance it does not at all mean that you may be totally free from budgeting, writing down earning and spending. Continue doing this it to prevent that unpleasant financial collapse that you’ve experienced.

By: Den Braun