Are you struggling with debts? Well, don’t despair. This is a common trend that many budget counselors see. Several months ago, this column focused on establishing a spending plan. This is still the best tool to use in dealing with your debts. You can find that article and the budgeting tools by clicking here. Once you know where you stand financially, you can determine how much you can apply to debts. Here are a few extra tips to help deal with your debt:

 

 

• If you’ve been a good customer (on-time payments, full payments), call the credit card company and ask them to lower your interest rate. Let them know you’ve received other offers/interest rates from other credit companies and you’re considering taking advantage of the offers.

• If things are tough financially but expected to improve over the next 6–12 months, you may want to ask for the credit card company’s Hardship Department. You can explain the difficulties you’re facing and ask for a lower payment, lower interest rate, or ask them to stop fees for several months. Success varies by creditor.

• If the situation appears to be long-term, you may want to consider a Debt Management Plan (DMP). This type of plan is set up by a licensed consumer credit counseling agency such as Catholic Charities or Consumer Credit Counseling Services. The agency would work with your creditors to get long-term concessions such as the ones mentioned above. The key to success is to combine a DMP with budget counseling so new habits can be formed. When checking out an agency, you will want to consider: Are they local? What do they charge? Will you be able to contact them easily by phone? Are they licensed by the state? How much of your payment goes to the creditors and how much toward agency fees? What does the small print say? Can you meet with them face-to-face? How will this affect your credit rating? There should be no hurry to sign you up for a plan, and you should ask all of the questions until you feel comfortable with the answers. Sitting down with a counselor provides you with options, and doesn’t mean you’ve signed up for anything at that time. A good counselor will answer your questions, outline possibilities and work with you to meet your goals. A DMP and budget counseling can be a real life saver for many, but they take determination and patience.