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If you have come to our website as a result of receiving a CRM collection agency letter, then chances are you are having trouble paying your bills. If our letter is the only collection agency letter you have received, then the solution may be as easy as a telephone call to our office. We at CRM view our ultimate goal as settlement of the debt for all parties involved, which includes both our client and you. Remember, collections is only a scary process if you choose to ignore the debt.
Now, let’s assume our letter is not the only collection agency and/or demand letter you are receiving. If that is the case, you are certainly not alone. Debt is pervasive in our national economy and countless individuals and families have multiple accounts in arrears. If that is the case, then similar to so many other people, your financial situation may require more than a simple call to us.
A financial crisis – whether big or small – comprised of mounting bills and seemingly not enough income to cover those bills can understandably feel incredibly overwhelming. But the good news is you can start taking steps now to markedly improve your financial situation and, as a result, your emotional health and well-being. Debt is extremely stressful so take control by implementing and using simple guidelines and tools that can transform your personal economy. Remember… your situation does not have to go from bad to worse.
So, where should you always begin? SELF HELP
First and foremost … develop a Budget
Before you go signing up with a third-party debt relief service, stop and help yourself by first developing a personalized budget. Think of it as a snapshot of your own personal financial scale that displays how much money you take in versus how much money you spend in any given month. While you can find information about budgeting pretty much anywhere and everywhere, especially online, the basic steps are simple:
Step # 1 – List your income from all sources (e.g., salary, dividends, child support, etc.).
Step # 2 – List all of your fixed expenses that do not change from month to month (e.g., mortgage payments, car lease payments, student loan payments, insurance premiums, monthly train pass, etc.).
Step # 3 – List all of your variable expenses, such as for groceries, clothing, vacations and entertainment.
Step # 4 – If your income exceeds your fixed expenses but you are still acquiring debt, then determine which variable expenses are not absolutely necessary and cut them out. May sound silly but passing on Starbucks and the Friday nights out with your friends at the bar could make the difference between barely breaking even and saving a few dollars every month. Point is you need the numbers accessible and in front of you to make this determination in the first place. Personal information is power.
Step # 5 – If your variable expenses can not be cut down any further and you are still acquiring debt each month, it is time to create a plan and maintain a BUDGET. By this we mean putting aside your debt for a minute and creating a forward-looking balanced spending program whereby your expenses (both fixed and variable) are budgeted to equate to less than your monthly income. This way, you can stop adding to your debt load each month and instead start paying it down.
Step # 6 – Now that you are living within a budget, it is time to start reducing the debt you already have by applying the excess income you are now maintaining each month towards the reduction of your overall debt.
Next … Contact Your Creditors and their Collection Agencies
Gather up all of your outstanding bills and start placing calls to each and every one of your creditors and their collection agencies. Try to work out modified payment plans with each creditor and collector that reduces your total payments on all debts owed to a manageable level that does not surpass your excess income each month. In other words, when added up, the monthly payments you work out with your creditors and their collection agencies should equal a number that is less than the excess income amount you have each month under your budget after payment of all your expenses.
If you communicate with your creditor and their collection agency and show good faith in trying to pay off the amounts you owe, it is very likely they will be willing to work out payment plans with you that fit within your budget.
A brief note about Secured versus Unsecured Debt
It is important to remember that you may have debt that is secured and debt that is unsecured. The difference being that secured debt is typically tied to an asset, such as your house for a mortgage or your car for a car loan. For these types of secured debts, if you stop making payments, the lenders have the option of taking the asset that secured the loan back into their possession. For example, this is what happens upon default when a lending bank forecloses on a home or a car is repossessed by the lender that financed its purchase. When dealing with secured debt, the asset in question will dictate the most appropriate course of action if you fall behind on payments. If you find yourself in default on payments with respect to secured debt loans, it may serve you well to speak with an attorney or qualified and reputable credit counseling agency to determine the best course of action.
The other type of debt individuals often have is unsecured debt, meaning debts that are not tied to any particular asset. The most common types of unsecured debt that people tend to carry are credit card debt, medical bills and signature loans. Creditors behind unsecured debt understand that there is no asset to repossess upon default and, as such, will be much more willing to work out a modified payment plan that fits within your budget. So, as set out above, if payments on your unsecured debt are exceeding your excess income each month, try and negotiate payment plans with all of your creditors and collectors that, when taken together, total a monthly amount that is manageable and does not exceed the amount allocated in your budget for monthly payments on those debts. If successful in doing this, your budget will be maintained and your debt will be reduced each month. You have now started on the road to living debt-free! While it may not happen overnight, if your budgeted numbers net you monthly income payments that are applied to pay down the principal amount of your total debt, rest assured that financial freedom will happen.
MONTHLY INCOME ˃ EXPENSES + DEBT PAYMENTS = FINANCIAL FREEDOM
If Self Help fails … consider contacting a Debt Relief Service.
While there is no shortage of resources available to you online to assist with working out repayment plans with your creditors and collectors on your own, you may consider looking into a debt relief service if getting a personal handle on your debt seems an insurmountable task for you. But as a consumer you must do your homework before you do business with any debt relief service. Check out any firm you’re considering with your State’s Attorney General and local consumer protection agency; read your contracts and agreements very carefully; get everything in writing; and understand fully the fees, terms, conditions and financial obligations you are undertaking when you sign up with any particular debt relief service. While reputable firms do exist that can assist you with stabilizing your financial situation, beware of services that charge significant fees, which they may hide, or urge their clients to make voluntary or larger contributions to a “program” that, in the end, can actually cause you more debt.
And, finally, for further information about additional options such as Debt Consolidation and filing for personal Bankruptcy , we recommend you speak with an attorney that specializes in these specific areas of the law.
If you have read this far, then you are serious about solving your debt problem. Be empowered by the information provided herein and all of the free resources available to you. Thousands of individuals engage in self help every year and manage to not only stop the acquisition of personal debt but reverse the trend and work their way out of debt to financial freedom. Information is power … use it!
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