How to find your way out of Christmas debt

Christmas and New Year celebrations have just gotten over and gradually you begin to settle down with your routine life. With all the gifts you have generously given, the vacations that you took your family to and all the dinner at swell restaurants, are you finding yourself stacked with too many bills to handle? Well, you can find debt help with the various debt consolidation companies willing to offer assistance.

What to do when you are in too much debt

Don’t panic. There is definitely a way out of this. There is always the option to go to a credit counselor for advice on how to take car of your money. But before you pay an outsider make sure you have tried the alternative solutions. Alternatives may be borrowing money from family members or friends if they are willing to risk so much money for you. If you have a 401(k) in place then you could even consider a loan from there.

When in debt, you can find debt help with credit counseling. Here are the top 5 things to remember when you go for credit counseling:

1. Check your expenses: When your debts go beyond what you can handle, the first thing to do would be to cut down on your expenses. This will curtail any additional debt that you may incur on your existing ones.
2. Enlist names of credit counselors: Before you go on the verge of bankruptcy, get a list of credit counselors who can help you out with your debt. This may be a little tricky because you need to locate a firm that will give you sound advice and not just extract money from you. You may begin by looking for a non-profit firm to save on the fees. Check out their enrollment and monthly fees. Organizations may ask only for only a token amount for enrollment usually capped at $75 and monthly fees capped at $50.
3. Check reliability of credit counselors: Find out if the credit counseling firm you are seeking help from is accredited by any professional groups like the Better Business Bureau or is a member of the National Foundation for Credit Counseling (NFCC).
4. Payment plans: As a debtor, you will be required to have your identity proof, recent pay slips and the outstanding bills. Once you have chosen a credit counseling firm, you can now put all your bills together to calculate how much debt you have and accordingly speak with any counselor. The credit counselor will then calculate how much money you owe and offer you a solution on how you can manage your debt. He might also suggest a certain payment plan that you can follow. This payment plan should let you save enough such that you can afford the basic necessities of life while also paying up your bills.
5. Enroll in a debt management plan: When you feel the credit counseling is not good enough, you can enroll in a debt management plan. Your debt counselor will negotiate with your creditors based on your financial condition and arrange for an affordable payment plan. Here you pay only once each month and then the money will be distributed to each of your creditors accordingly.

Most debt management programs help you pay off your debts in a time period of 5-7 years. It might also affect your credit rating but it is anytime better than bankruptcy which will surely affect your score very badly.

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