Being deeply in debt is stressful. Worrying about paying bills, dreading phone calls from collection agencies and receiving dunning notices in the mail can affect your peace of mind and your health. A debt burden cannot be discharged overnight as some claim, but you can begin to pay off what you owe and start feeling better almost immediately.
Evaluate
Before you seek relief from your debt, take a look at your complete financial picture. Who are the people claiming you owe money? How much? What interest charges and fees are being accrued? What offers of settlement are offered? Keep all notices, bills and letters in one file.
In addition, go to AnnualCreditReport.com and get one free copy each of your credit reports from Trans Union, Expedia and Equifax, the three credit reporting bureaus. This website is the only one authorized by the Federal Trade Commission to issue a free report annually from the credit bureaus. If you want your credit scores, you'll pay a small fee for those numbers.
Review your credit reports to make sure that the information is accurate. Inaccurate information can make it difficult for you to get a loan and it can drag down your credit score. Moreover, you may be trying to pay off a debt belonging to someone else. Follow FTC guidelines on how to report mistakes to the credit bureaus.
Consolidate
Once you have a clear picture of your debt burden, contact your creditors to strike a deal. Ask credit card companies to lower their interest rate; many will if you explain your plight. If you are behind on a personal loan--for your car, for example--ask your lender to renegotiate the loan, perhaps adding missed payments to the end of loan. If they agree, request that additional interest charges and fees be waived.
Take similar action with other creditors. If you're behind on mortgage payments, you may have additional rights to help forestall foreclosure or renegotiate your loan.
Liberate
If you're still feeling overwhelmed, seek third-party assistance to help you manage your bills and consolidate debt. Follow FTC guidelines for finding a credit counselor. Communicate with your creditors, keeping them informed of what you are trying to do to resolve the problem. Your troubles won't quickly disappear, but the stress of not knowing where you stand should ease over time.
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