Debt is often overwhelming. When you feel like what you owe is about to swallow you whole, you probably are in need of debt help. Hundreds of organizations and programs exist to reduce what people owe. The hard part is knowing where to start and how to find the organizations that can get you back on solid financial ground.
Contact Your Lenders
Many credit card companies and other lenders offer various hardship programs to those who are in tough financial situations. Through these programs, you can negotiate for a better interest rate, defer your payments, or settle your debt. You also can get basic debt counseling or set up a debt management plan. These programs won't give you money to pay your debts, but they either reduce what you owe or help you figure out how to approach the debt you have. Call your lenders to find out details about the programs they have.
Let Uncle Sam Help You
There are no federal programs that will pay off your debts for you. However, a plethora of federally funded programs exist that can impact your budget. For instance, you may qualify for the Supplemental Nutrition Assistance Program (food stamps or SNAP), Supplemental Security Income or the Low Income Home Energy Assistance Program. These programs cover such things as child care assistance and electric bills. You even can apply for the income-based repayment plan so that your federal student loan payments don't exceed 15 percent of your income. With these issues handled, you'll have more money to put toward your debt repayment. You can get information on most of these programs through your local Department of Health and Human Services offices or other organizations like the Department of Housing and Urban Development.
Charity
Local non-profit organizations may provide debt counseling or help you set up a debt management plan for free. Some may provide other assistance like food or gas money. Churches and hospitals often know of this kind of help. For example, the New Jersey Housing and Mortgage Finance Agency gives grants to churches and other nonprofits to provide free foreclosure and mortgage counseling. Another example is Operation Round Up, which funds things like gas for heat and medical aid. More charities and organizations that may help are listed on the Need Help Paying Bills website (see Resources). Your local Chamber of Commerce also should be able to give you a list of all the registered non-profit agencies who may provide help.
Hire a Budget Planner or Debt Company
Budget planners have their information readily available online and in your local phone book. A budget planner will look at your finances and show you the best path for repaying your debts. Debt companies can do everything from negotiate your debt to make payments to your creditors on your behalf. You can check the legitimacy of debt companies and planners through the Better Business Bureau. Some agencies like the Federal Trade Commission offer debt help for free, so always be wary of companies that charge you hefty fees.
Contact an Attorney
Sometimes lenders are incredibly aggressive when it comes to collecting what you owe. An attorney can advise you of your rights and tell you if a lender is violating due process in collections (e.g., filing proper paperwork with the courts, giving you time to respond to late or other notices) as stipulated in the Fair Debt Collection Practices Act. Having an attorney also gives you weight against the lender -- they may take you more seriously once you have legal representation. This sometimes is necessary when lenders claim you owe money and you know your debt doesn't match the named amount. You should contact an attorney any time any time correspondence from a lender is threatening, confusing or inaccurate and not corrected by account reviews. Typically, you should hire a lawyer as soon as you know dealing with the lender requires legal expertise or an appearance in court.
Call Your Bank
Banks can help you set up automatic payments for your debts. Although you'll have to be careful you don't let your account overdraw, automatic payments can save your credit score, as they prevent you from paying late on your debt. Bank workers also are familiar with laws on garnishment and often have financial counseling services available to account holders. If your debt still leaves you with a debt-to-income ratio of 40 percent or less (the approximate guideline for HUD), or if you have a credit score a lender considers prime (usually at least 600), your bank usually can help you via refinancing, consolidation and general loans.
Talk to Friends and Family
Sometimes getting a loan from a bank when you already have debt simply isn't an option. In these cases, friends and family may be willing to front you the money you need to avoid more serious financial problems like bankruptcy or home foreclosure. If you get help from loved ones, approach the loan formally. Put terms in writing, and have a clear plan for when you'll repay what you borrow. This may not seem necessary, but at the very least, documentation helps you track your debt and work with your budget.
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