Bankruptcy & Foreclosures

While it is obvious that a good deal of staying on top of the debt management game is making all of your payments on time, what happens during the inevitable slip-up? Making a late payment can happen to even the most organized and while unnerving, isn’t the end of the world. The first step once you discover that the date due has passed, take a deep breath and locate the phone number of the creditor on the bill or accompanying paperwork. Make the call immediately and explain your situation directly to the creditor. Most institutions will allow you to pay with your credit card right over the phone. If that is not an option, tell the creditor that you will submit payment that same day through the mail. In most cases this will be sufficient to get the creditor to void the late fees (assuming you don’t have a history of late payments) but in some cases the creditor may request that you overnight the funds. If this is the case, most couriers (US Mail, UPS, FedEx, DHL) offer overnight parcel service. Keep in mind that using electronic funds transfers (such as Western Union or MoneyGram) are actually speedier and cost less.

The process is similar but a bit more timely if there is no way for you to make your payment. Again this process begins by making an immediate call in to the creditor in which to explain your situation. Suggest that you wish to break your payment up so that you’ll immediately submit as much as you can afford with the balance added to the next month’s payment. If you have a legitimate excuse (sudden loss of job, illness, etc.) be sure to let the creditor know about it. Many institutions have the ability to temporarily suspend debt payments and defer them until you’ve recovered. Most creditors will be willing to work with you once you make the effort to address the situation before it becomes an outstanding debt.

While the best advice is to always make your payments in full and on time, sometimes situations beyond our control can pop up and make a mess of even the most steady debt management plans. Remember that quick response and honesty with the creditor can prevent further damage to your credit.

When it comes to managing debt, who can argue with the logic that the first step to success is keeping track of your money? If you find yourself struggling and have multiple bank accounts, this is the time to consider closing out accounts you don’t use and transferring funds (if any) to the accounts you use. There is no benefit to having more bank accounts open in you name than absolutely necessary.

At its core, any debt management system relies heavily upon your ability to keep track of your funds so that you can distribute the money accordingly. Not only does fewer accounts aid in being able to keep track of your funds, it also avoids your having to pay maintenance fees on stagnant accounts.

Surprisingly, many banks work off a policy whereby if an account happens to carry a certain balance, typically $100 or under, they begin to automatically deduct monthly service fees from your account. I have encountered countless stories of people who forgot to close out an account with a insubstantial balance (say $20 for example) before traveling abroad, moving away, getting married, etc. only to receive contact years later that they owed the bank hundreds of dollars worth of service fees that resulted in a negative balance on the account. Obviously this kind of situation is detrimental to your credit score and your reputation with the financial institution yet could have been avoided by simply closing out the account.

Most individuals only need two bank accounts, a checking and savings. While savings accounts typically earn interest and checking do not, if you find that you maintain a very low balance in your savings account and fall into the category of getting hit with monthly service fees to do so, don’t hesitate to transfer all of your money into the checking account and closing the savings out entirely. It makes no sense to keep money in an account if it ends up costing you money each month to do so.

In the not-so-distant past, society was forced to play by what has been affectionately dubbed “bankers hours”. This of course meant that as a majority of the population finished their workday at 5pm, they simultaneously missed the opportunity to make it to the bank. Thanks to the digital age, no longer can poor bankers be held accountable for you missing or making late payments.

A relatively new, but highly effective means of managing debt is to make use of your financial institution’s online banking service. All that is required, usually, is a computer with access to the internet. The benefit is that it allows the luxury of handling banking duties any time, day or night. Furthermore options like electronic payments can be set up to automatically transfer your payment directly from your bank account each month. This greatly decreases the odds of forgetting to write out a check or the worries of keeping current even if you plan to travel.

Getting set up with direct deposit is another helpful tool in managing debt. Direct deposit is simply the process of your employer’s institution depositing your paycheck automatically into your bank account instead of being written as a check you are forced to cash. In addition to being timelier than a traditional check, direct deposit has been proven to aid in saving money for each pay-period. The theory behind it is simple: Cash in hand is always easier to spend than when it has to be withdrawn first.

Technology has created opportunities that were the stuff of science fiction as recently as a decade ago. Don’t be afraid to put this convenience to use. Online banking is safe and secure and allows the luxury of paying bills whenever it is convenient rather than simply when the bank is open. In addition automated payment not only makes the process of keeping track of monthly debt easier, it is also favored by most creditors.