Bankruptcy & Foreclosures

In the confusion of attempting to make sense of financial chaos, it can be difficult to find a place to turn for honest help. The Federal Trade Commission of the United States government exists to protect American consumers despite the fact that they are most likely not the first choice of many who find themselves in financial trouble. The fact is their vast online resource is a great place to begin digging around if you have debt management questions that nobody seems capable of answering.

Take for example the following situation. What if your credit counselor has gone out of business?

What happens to your debt management plan (or DMP) if the credit counseling company that managed your debts shuts down? A counseling agency that is going out of business may send you a notice telling you that your DMP is being transferred to another company. Or it may tell you that you need to take some action to keep your financial recovery on track. If a government agency has filed an action against your credit counseling company, you may get a notice from a third party. If you discover that the organization handling your DMP is going out of business you need to:

Contact your bank to stop payment if you are making your DMP payments through automatic withdrawal.

Start paying your bills directly to your creditors.

Notify your creditors that the organization handling your DMP is going out of business. Consider working out a payment plan with your creditors yourself. Ask if they will give you a reduction on your interest rate without a DMP.

Order a copy of your credit report. Check for late payments — or missed DMP payments — that may result from the company going out of business. If you see “late” notations you don’t expect, call the creditor immediately and ask that the notation be removed.
Understand that they have no obligation to do it.

If payments are late because the organization handling your DMP has failed to make scheduled payments, the consequences can be just as devastating as if you failed to make payments to the DMP. If you do not act quickly to make arrangements with your creditors, you could incur late charges that increase your debt, lose the lower interest rates associated with the DMP, and have “late” marks on your credit report.

This and loads of useful information are available at the Federal Trade Commission’s site (http://www.ftc.gov) or directly by clicking here.

Financial Utopia… Who doesn’t like the sound of that? While this may be a worthy goal of anyone who finds themself in the daily grind, it is important to realize that each financial goal we set has a specific timeline. In other words, even when we know what we want, some things don’t happen overnight.

Yahoo’s personal finance section has recently posted an article in which the path to financial utopia is laid out not only in steps and appropriate action but with realistic time frames to give yourself with which to achieve these goals.

For example, the first step is to bring order to financial clutter with a time frame of 35 days. The list is then broken down into weeks:

Week 1: Get Psyched - When you organize your financial paperwork, you’re less likely to miss a bill payment and more likely to know exactly where your money is going, which could help you save.

Week 2: Pay Attention - Jot down in a notebook what you spend for a month. As Bob Goldman, a financial planner in Sausalito, Calif., puts it, the idea is to cut through the “grand amnesia of what happens to your money” after your paycheck lands in your bank account. Can’t bear to record every latte and magazine for four weeks? Do it for one week and multiply each category by four; add in your monthly bills. Then take stock to see where you can cut back.

Week 3: Shred - You don’t need most of the financial paperwork that’s cluttering your life. You can throw out utility bills and credit-card statements within a few months. Hold on to pay stubs only until your W-2 arrives, monthly financial statements until you have year-end ones. Prevent new clutter from forming by opting for online statements from banks or brokerage firms.

The list then continues to reach the 5 week (35 day) point. Bigger goals such as finding a better job are estimated to take some 35 months while even longer-term aspirations (such as saving for retirement) are given periods of 35 years.

I definitely recommend giving the piece a read by clicking here. Sometimes we have goals and we even have an idea of how to set out to achieve them but not giving ourselves proper time to turn them into reality is a definite and often overlooked consideration.

It seems like everyone wants to offer advice about getting out of debt but the silence can become deafening once their own bills start piling up. In effort to make sense of a confusing topic for many, I’ve been digging around the web seeking tips and advice that simplify the debt management process. There is actually a site called Debt Management Tips.com who prides themselves on offering sound advice that anyone can put into immediate use.

Below are some of their recent tips:

Know before you owe

Modern debt management is more than just paying your debts. Personal debt management is walking the fine line that ensures you have credit available the next time you need it! In fact, the best tip to manage debt is to begin debt management before you become a borrower.

1. Track your money. Know how much you have and how much income you can reasonably expect in the near future. Know what your monthly expenses are and what you have left to pay creditors.

2. Save before you borrow. The best time to charge is when you really could pay cash. Although that’s not always possible, it is possible to build a money reserve that can cover several months’ expenses if you run into financial problems.

3. Investigate before you borrow. Look at borrowing as “buying money”. Comparison shop to find the best money bargain available whether you’re shopping for money through a bank, a finance company, or applying for a new credit card.

4. Beware of the large print! Nothing down, no-interest or low interest may look attractive but such offers frequently are filled with fees and penalties that can turn ugly if you get in a pinch. Always read the fine print!

5. Have a personal debt management plan in place to pay back before you borrow. The easiest way to lose control of your money is to let your lender make the decisions about your monthly payments. This is especially true for credit card debt.
-Keep records of credit card purchases, what you bought, the date of your purchase, and a plan to pay for the item(s).
-Although you are required to make a monthly minimum payment, set a goal for paying major credit card debts (i.e. appliances) within a specific time frame like three to six months.
-Pay up small credit card purchases monthly. Sale items are no longer bargains when interest accrues to the sale price.
-Tack on interest charges and credit card fees in addition to your principal payment. For example: You’ve budgeted $100.00 a month in payment for a new TV. The interest and fees on your credit card statement total $24.19. Your total payment = $124.19. That way you won’t be paying interest on accrued interest.

6. Prioritize your debts.

7. Know your rights as a debtor. If you live in the US, the Federal Trade Commission (FTC) is an excellent resource both to help you manage your debts and provide you with valuable information should your debt spin out of control.

8. Check with the experts. The Internet, television, and print media are full of debt management tips and expert advice about managing debt, and acquiring wealth. Magazines like “Smart Money” aren’t just for the rich; they’re for those who want to learn to make smart money decisions. A couple of books worth browsing (and buying) are “Slash Your Debt” by Gerri Detweiler and “How to Get Out of Debt, Stay Out of Debt, and Live Prosperously” by Jerrold Mundis. However do be cautious when taking the advice of others:
-Just because someone has written a book, an article, or has a debt-related web site doesn’t mean they are an expert on personal debt management. Do “comparison shop” for debt management advice with the same care you shop for money to borrow. Find several opinions that match up with the opinions of others.

-Debt management advice isn’t written in stone. Modify personal debt management tips and advice to work with your budget and your situation.

Of course, my favorite advice would have to be their opening statement that basically says the best way to manage your money is to avoid incurring any debt in the first place.

The entire article can be viewed here.