Experienced Tax
Accountant - If you are having trouble paying your debts, it is important
to take action sooner rather than later. Doing nothing leads to much larger
problems in the future, whether it's a bad credit record or bankruptcy
resulting in the loss of assets and even
If
you've accumulated a large amount of debt and are having difficulty paying your
bills each month, now is the time to take action--before the bill collectors
start calling.
1.
Review each debt. Make sure that the debt creditors claim you owe is really
what you owe and that the amount is correct. If you dispute a debt, first
contact the creditor directly to resolve your questions. If you still have
questions about the debt, contact your state or local consumer protection
office or, in cases of serious creditor abuse, your state Attorney General.
2.
Contact your creditors. Let your creditors know you are having difficulty
making your payments. Tell them why you are having trouble, perhaps it is
because you recently lost your job or have unexpected medical bills. Try to
work out an acceptable payment schedule with your creditors. Most are willing
to work with you and will appreciate your honesty and forthrightness.
Tip:
Most automobile financing agreements permit your creditor to repossess your car
any time you are in default, with no advance notice. If your car is repossessed
you may have to pay the full balance due on the loan, as well as towing and
storage costs, to get it back. Do not wait until you are in default. Try to
solve the problem with your creditor when you realize you will not be able to
meet your payments. It may be better to sell the car yourself and pay off your
debt than to incur the added costs of repossession.
3.
Budget your expenses. Create a spending plan that allows you to reduce your
debts. Itemize your necessary expenses (such as housing and healthcare) and
optional expenses (such as entertainment and vacation travel). Stick to the
plan.
4. Try
to reduce your expenses. Cut out any unnecessary spending such as eating out
and purchasing expensive entertainment. Consider taking public transportation
or using a car sharing service rather than owning a car. Clip coupons, purchase
generic products at the supermarket and avoid impulse purchases. Above all,
stop incurring new debt. Leave your credit cards at home. Pay for all purchases
in cash or use a debit card instead of a credit card.
5. Pay
down and consolidate your debts. Withdrawing savings from low-interest accounts
to settle high-rate loans or credit card debt usually makes sense. In addition,
there are a number of ways to pay off high-interest loans, such as credit
cards, by getting a refinancing or consolidation loan, such as a second
mortgage.
Tip:
Selling off a second car not only provides cash but also reduces insurance and
other maintenance expenses.
Caution:
Be wary of any loan consolidations or other refinancing that actually increase
interest owed, or require payments of points or large fees.
Caution:
Second mortgages greatly increase the risk that you may lose your home.
You can
regain financial health if you act responsibly. But don't wait until bankruptcy
court is your only option. If you're having financial troubles, don't hesitate
to call.
Amare
Berhie, Senior Tax Accountant
(651)
300-4777, (612)424-1540, (651) 621-5777
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