Top 10 Debt Relief Tips - Part 2
March 15th 2009 03:32
To read the first 5 tips visit - Top 10 Debt Relief Tips - Part 1
6. Talk to Creditors about Hardship Plans
It may be surprising to learn that most, if not all lenders (including mortgage lenders) have some form of hardship assistance available for consumers who can demonstrate a genuine financial hardship. Often called “workout departments” or “loss mitigation departments,” these organizations specialize in helping consumers find ways to get caught up on problem debt. Some of the tools they have at their disposal are reduced interest rates, temporary forbearance, loan restructuring, and temporary deferment. If you have a genuine financial hardship, ask to speak to this department the next time you talk to your creditor.
7. Scam Alert: “Clean” Tax ID Number
This one can really get you in trouble. Some companies will (you guessed it: for a fee) apply for a new federal tax identification number on your behalf. The theory is that since this new number has no bad credit events associated with it, you can use it to establish a new, more favorable credit history. The problem is that many of these operators will get for you an employer tax ID number, instead of a personal Social Security number (which, by the way, the Social Security Administration is extremely reluctant to hand out, even to people who can prove they’ve been victims of identity theft). However, if you apply for any kind of tax identification number for what can be deemed fraudulent purposes, you’ve got much bigger problems than bad credit; you could be facing jail time.
8. Make a Budget
Okay, so nobody enjoys sitting down and thinking about how much money they’ve got coming in and how much they’ve got going out. The trouble is, if you’re serious about taking care of your debt problems without involving lawyers or judges, at some point you’ve got to be able to talk intelligently with creditors about what you can do and what you can’t do. Get out your pay stubs and your checkbook (or your online bill payment record) and make a “money in” and a “money out” column. It really will help, and you might even find out you aren’t in as bad a shape as you thought!
9. Scam Alert: Credit Counseling Scams
This one is tricky, because credit counseling has been around a long time and is generally supported by banks, credit card companies, and the Better Business Bureau. But there are bogus “counseling” agencies out there who are mainly interested in an up front fee and not so much in following through with either counseling you or helping you work with your creditors. Look for an agency affiliated with the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Also, ask lots of questions about fees and types of programs offered. If they require a large upfront fee (more than $100), you should walk.
10. Talk to an Attorney
If you’ve tried it on your own and been unsuccessful, and especially if you are being warned of pending legal action, you may want to consult with a qualified bankruptcy attorney. Though far from pleasant, personal bankruptcy may offer you a way to keep the assets that are most important to you and your family. The initial consultation is usually free.
6. Talk to Creditors about Hardship Plans
It may be surprising to learn that most, if not all lenders (including mortgage lenders) have some form of hardship assistance available for consumers who can demonstrate a genuine financial hardship. Often called “workout departments” or “loss mitigation departments,” these organizations specialize in helping consumers find ways to get caught up on problem debt. Some of the tools they have at their disposal are reduced interest rates, temporary forbearance, loan restructuring, and temporary deferment. If you have a genuine financial hardship, ask to speak to this department the next time you talk to your creditor.
7. Scam Alert: “Clean” Tax ID Number
This one can really get you in trouble. Some companies will (you guessed it: for a fee) apply for a new federal tax identification number on your behalf. The theory is that since this new number has no bad credit events associated with it, you can use it to establish a new, more favorable credit history. The problem is that many of these operators will get for you an employer tax ID number, instead of a personal Social Security number (which, by the way, the Social Security Administration is extremely reluctant to hand out, even to people who can prove they’ve been victims of identity theft). However, if you apply for any kind of tax identification number for what can be deemed fraudulent purposes, you’ve got much bigger problems than bad credit; you could be facing jail time.
8. Make a Budget
Okay, so nobody enjoys sitting down and thinking about how much money they’ve got coming in and how much they’ve got going out. The trouble is, if you’re serious about taking care of your debt problems without involving lawyers or judges, at some point you’ve got to be able to talk intelligently with creditors about what you can do and what you can’t do. Get out your pay stubs and your checkbook (or your online bill payment record) and make a “money in” and a “money out” column. It really will help, and you might even find out you aren’t in as bad a shape as you thought!
9. Scam Alert: Credit Counseling Scams
This one is tricky, because credit counseling has been around a long time and is generally supported by banks, credit card companies, and the Better Business Bureau. But there are bogus “counseling” agencies out there who are mainly interested in an up front fee and not so much in following through with either counseling you or helping you work with your creditors. Look for an agency affiliated with the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Also, ask lots of questions about fees and types of programs offered. If they require a large upfront fee (more than $100), you should walk.
10. Talk to an Attorney
If you’ve tried it on your own and been unsuccessful, and especially if you are being warned of pending legal action, you may want to consult with a qualified bankruptcy attorney. Though far from pleasant, personal bankruptcy may offer you a way to keep the assets that are most important to you and your family. The initial consultation is usually free.
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