Manage Your Debt: #2 Evaluating Your Options (Part I)

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.

Manage Your Debt: #2 Evaluating Your Options (Part I)

Task 1: Prioritize Your Bills
If you’re being hounded by creditors or are simply stressed by debt, it can be easy for your priorities to get out of whack. You might wind up paying a credit card bill when the rent or mortgage is due just because a collection agency is making your life miserable. You’d be risking eviction or foreclosure over a bill that could be wiped out in bankruptcy court, or at least postponed without major consequences.

Dividing your bills into three:
Essential Bills
Important Bills
Non-Essential Bills

Essential Bills are the ones that if you don’t pay, would result in catastrophic consequences.
Important Bills are the ones that you should pay if at all possible, because failure to pay them would have serious consequences.
Non-Essential Bills are the debts they aren’t secured by property. Failure to pay these debts could have serious repercussions for your credit score and might eventually result in lawsuits and judgments.

Task 2: Match Your Resources to Your Bills and Debts
Look at the first two categories of savings that you identified in step 1, the easy stuff to cut, and the harder stuff, and then add those to your monthly net income (what you get in your paycheck after all the taxes and other deductions have taken). Now compare that income to your first two priorities, essential bills and important bills. Can you cover the minimums required?

The first you can do yourself, just by talking into your lender; for IRS help, you’re probably best off using a tax pro. Even child support has worsened, but this can take awhile and might require a lawyer’s help.

Other possibilities: You might take that second job we talked about earlier. You could increase your paycheck by eliminating or reducing 401 (k) contributions temporarily or, if you get a tax refund, by reducing your withholding.

If you still can’t pay for essential and the important, you’ll probably need to take some last resort action, such as selling a house if you own one or renting cheaper digs. You’ll also need to consult a bankruptcy attorney about wiping out any nonessential debts, because those obviously aren’t going to get paid.

Your Credit Score Liz Pulliam Weston

Manage Your Debt: #2 Evaluating Your Options (Part I)

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.