Free help to get out of debt

There are plenty of companies out there that provide free help to get out of debt.  The process below will get you started so you will know what your debt situation is and where you can go for help.

The obvious first step is you need to design a get out of debt plan.  So lets look at how you might do that.

Contacting Your Creditors:

Contact your creditors like a shot if you’re having stress making ends meet. Tell them why it’s difficult for you, and try to work out a new payment plan that brings down your payments to a more manageable degree. Don’t wait until your debts have been turned over to a debt collector. At that stage, your creditors have given up on you.

Dealing with Debt Collectors:

The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t okay of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Managing Your Auto and House Loans:

Your debts can be unsecured or secured. Secured debts usually are tied to an asset, like your auto for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your auto or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.

Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your automobile is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the automobile. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoid the added costs of repossession and a unfavorable entry on your credit report.
If you fall behind on your house payment, contact your lender straight off to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the state of affairs is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an added amount toward the past due total. Other lenders may agree to change the terms of the home payment by extending the repayment period to reduce the monthly debt. Ask whether added fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling office. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making house payment payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling bureau near you.

Help yourself

Developing a Budget: The first step toward taking control of your debt situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like home payment payments or rent, auto payments, and insurance payments. Next, list the disbursements that change — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your local library and bookstores have info about budgeting and money management proficiency. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and making plans to save money and pay down your debt.

Bankruptcy

Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it hard to obtain credit, buy a residence, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into fiscal difficulty and can’t satisfy their debts.

There are two main types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Lawyer fees are added and can vary.

Effective October 2005, Congress made broad changes to the bankruptcy laws. The basic effect of these changes is to give people more inducement to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 permits people with a reliable income to keep property, like a mortgaged home or a car, that they might otherwise lose becuase of the bankruptcy process. In Chapter 13, the court ok's a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year time period, rather than surrender any property. After you have made all the payments under the plan, you receive a release of your debts.

Chapter 7 is known as straight bankruptcy, and involves taking of all assets that are not exempt. Exempt property may include autos, work-related instruments, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after being granted a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.

Both types of bankruptcy may eliminate unsecured debts and halt foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also render exemptions that allow people to keep certain property, although exemption amounts change by state. Note that personal bankruptcy usually does not stop child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy commonly does not allow you to keep property when your creditor has an unpaid home payment or security lien on it.
Another major alteration to the bankruptcy laws affect certain requirements that a consumer must clear prior to filing for bankruptcy, no matter what the chapter. You need to get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that manages bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is provided by the U.S. Trustee Program at www.usdoj.gov/ust.

All the best to you!