Debt: What Is It and How Do I Get Out of It?

When the credit cards first came in the mail, you thought you were special. Why else would complete strangers send you free money? Now you realize that it isn’t free money after all and you are having difficulty making your minimum monthly payment. Combine that with your car loan, school loan, and rent or mortgage payment and you have serious problems.

How do you know if you are in debt? A very tricky question that requires complete and total honesty. Do you have a savings account? Do you only pay the minimum monthly amounts on your credit cards? Have you been declined credit or a credit line increase? After paying your monthly credit card bills, do you accumulate as much or more debt the following month?

If you are already past due on accounts, it is extremely important to contact your creditors to inform them that you are having difficulty making payments. Be honest and see if they will work with you to create a modified payment pan that will enable you to continue to make payments toward your debt. By maintaining contact with your creditors you won’t feel stressed about your debt and potential debt collectors hounding you.

What if debt collectors begin to bother you? The Fair Debt Collection Practices Act is a 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., nor can they call you at work should the collector knows that your employer doesn't approve of the calls. Collectors may not harass you, make false statements, or use unfair practices when they try to collect a debt. Debt collectors must honor a written request from you to cease further contact.

The most important thing to know is that you are not alone. Millions of Americans face financial problems each year due to any number of factors including loss of employment, change in marital status, health problems, or spending more than you can afford. Your options for overcoming debt include budgeting, credit counseling from a reputable organization that includes debt consolidation, home equity loans, and finally, bankruptcy.