Managing Debt

It’s easy to presume that creditor companies won’t bother to spend money or time prosecuting delinquent clients, what with the relatively small amounts that remain unpaid by telephone subscribers and credit card holders.
 
In most cases, the amount involved and the age of the debt (how long it is unpaid) determine whether a civil case will be filed against the debtor.
 
 
Here are some practical tips to help you eliminate credit card debt:
 
  • Turn down offers for so-called “free” credit cards. There’s no such thing as a free credit card although the card company may offer membership for the first year for free. But everything you charge using that card will turn up in a bill or statement of account pretty soon.
  • Eliminate extra credit cards.  Having one credit card is often enough for your monthly needs. Remember that your credit limit is often set at an amount equal to or double that of your monthly income; if you maxed out your card, then you know you’ve already spent beyond your means. 
  • Stop using your credit cards. If you’re already up to your neck right now in credit card debt, the first thing you should do is STOP using your credit card and pay for your expenses in cash. Depending on how bad your credit card debt is, cutting up those plastics may be the best thing to do now.
  • Negotiate terms of payment. Hiding from collectors and rejecting notices and even court summonses won’t make your debt problem go away. Avoiding them can only make it worse because a collection case can proceed even without your presence in court. The best thing to do is to send a written proposal to the card company asking for time to settle your account and stating in clear terms how you intend to pay them back. Oftentimes, offering to pay a fixed monthly amount for a specified period can stop the annoying calls and demand letters. More importantly, stick to your payment plan and you’ll be debt-free before you know it.
 
So clean up your act while you are young, or while you still can. Every bill you fail to pay leaves a trail of breadcrumbs that birds won’t eat away.
Apart from learning financial responsibility, it is important to maintain a good credit history because most companies are now members of the credit investigation bureau. This bureau diligently keeps records of every reported debt or delayed payment, and may one day be your source of difficulty in obtaining that much needed housing, car or business loan.

 

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