Dealing with Debt

Most Americans used credit to enhance their lifestyle and live the "good life". That was great when you could make the payments on your debt. Well, if you are laid off, you now have problems paying for groceries, gas and bills without a source of income. You can always take a part time job to help with the bills. However, for most people in this situation, a part time job just won't help. Many Americans are falling behind in their payments to credit card companies. There is help and you can do it yourself. Do not pay debt services to help you do what you can do for yourself.

Follow these steps and you can help yourself.
1. Before getting laid off, get yourself on a debt reduction plan. Pay off high-interest credit cards quickly. Put money aside for emergencies. Do not use the credit cards for purchases unless it is an emergency. I do mean emergency. An emergency is not a sale for a big screen TV. An emergency is for death in the family or medical reason. If you can't buy it with cash, don't buy it at all.
2. If you have been laid off, create a budget immediately. Review all purchases or reoccurring expenses. Find those you can cancel. Look at gym memberships, cable bills for pay packages, eating out, etc. You will be surprised by the amount of money spent on those items.
3. Do not purchase COBRA unless it is your only choice. You can find better programs for less money. Click on the ehealthinsurance link next to this blog. They can find you a program to help you out. You can also you discount medical programs to help with bills.
4. If you are taking medications, move to generics. You should always ask your doctor for generics even if you are employed. Most drug programs cost you $35 for a brand name medication. Wal-Mart, Wal-Greens and others have discount medications for $4 for 30 days. Look at those first. Print the list of medications they have and carry it with you. If you need an antibiotic, give the list to the doctor and have him prescribe something from the discount list.
If you can't move to generic, use the online pharmacies. Their prices are a lot better than local pharmacies. Buy in 90 day quantities and save more.
5. If you are running out of money quickly, then you need to contact your creditors immediately. You should be talking to them before they send bills and overdue statements to you. Explain the situation. Most of the creditors realize the problems with the economy and can help. Talk with them first. Don't throw bills in the trash can and hope they will understand. MAKE THEM UNDERSTAND! They would rather get the money from you over a longer period of time than have a debt collection agency work for them. If they put you on a program to reduce your payments, get the program details in writing. Don't risk someone making a decision and not documenting it.
6. Do not deal with debt collection agencies at all. After talking with people who needed help with their debt, they were abused or threatened by debt collectors. You do not have to deal with the collection agency at all. Send a certified registered letter telling the agency to cease and desist all communications with you and that you will take up the matter with the creditor DIRECTLY. You have the right to do that. They cannot call you at work once you notify them that you cannot receive personal or business calls at work. Follow up with a certified, registered letter immediately. I have found that if you tell one person, he doesn't tell the others. You can still get calls. By sending a certified, registered letter, you have proof that the agency was notified that they can't call you at work and that they are to stop all action against you.
7. Don't let it get too far. Sometimes, the creditor will sell their bad debt to another company for a few cents on the dollar. If you have gotten to this point, you need to get them off of your back quickly. Consider bankruptcy at this point. Companies which buy bad debts will do anything to collect. I do mean anything. Bankruptcy will protect you from them.

Follow these rules and you should be able to weather the storm. Just communicate with your creditors if things aren't working out in finding a new job or if you have to take a lower paying job. Most credit companies would rather get all of the money rather than pay a debt collector to get it back. WORK WITH THE CREDITOR!

Here are some resources for you.
Fair Debt Collection Practices Act
Steps You Can Take to Stop Debt Collectors