Frequent calls from bill collectors is one sure sign that you have debt problem. If this is the case, it's time to get proactive. Talk to your creditors as soon as possible. You might be incurring additional charges while you wait. Or they might be willing to change your interest rate and save you money.
Here are some tips for talking with creditors:
Creditors do not have the right to harass you. The Fair Debt Collection Practices Act is a federal law that protects you. It forbids collectors from:
Bankruptcy is a way to eliminate debts or repay them under court protection and supervision. Child support payments, alimony, fines, taxes, and some student loan obligations are typically not eliminated.
Bankruptcy was created to give a hopeless debtor a fresh start and should always be considered a last resort. A bankruptcy will stay on your credit report for up to 10 years, possibly affecting your ability buy or rent a home and will likely result in higher interest rates on future loans.
Types of Bankruptcy
There are many different types of bankruptcy, but the most common are Chapter 7 and Chapter 13.
In a Chapter 7, or "straight bankruptcy," you agree to turn over all of your non-exempt assets to a Chapter 7 trustee. The trustee then sells your assets and distributes the money to your creditors.
Chapter 13, or "reorganization," allows you to keep your property, such as a mortgaged house or car. It includes a plan based on disposable income to pay creditors over three to five years with a single monthly payment.
Credit counseling agencies can help you get a handle on your debt. They:
To learn more about these agencies, or to find one in your area, visit the National Foundation for Consumer Credit at www.nfcc.org.