Hello everyone! My name is Brenda Butnick and I’m a Financial Coach at Jewish Family Service in Dallas. I work one-on-one with clients to help them achieve financial self-sufficiency.
We discussed the second step in Best Practices to Get Out of Debt in my last blog, and today we will move on to the third step.
Getting out of debt involves a multi-step process. Today we will focus on considering debt relief options.
Here is the third step to take:
Step 3: Consider debt relief options
- Debt consolidation: This strategy rolls multiple debts, often high-interest credit card balances, into a single new loan with a lower interest rate.
- Potential options: A balance transfer credit card with a 0% introductory APR period or a personal loan.
- Key considerations: Have a plan to pay off the consolidated debt within the promotional period, and avoid taking on new debt.
- Negotiate with creditors: If you have fallen behind on payments, you may be able to negotiate directly with your creditors.
- What you can do: Ask about hardship programs, lower interest rates, or a modified repayment plan. If your account has gone to collections, you may be able to negotiate a settlement for a lump-sum payment that is less than the total amount owed.
- Credit counseling: A reputable, nonprofit credit counseling agency can offer free or low-cost services.
- How they help: A certified counselor can help you create a budget and may enroll you in a Debt Management Plan (DMP). A DMP can help lower your interest rates or waive fees, allowing you to make a single, more manageable monthly payment to the agency, which then pays your creditors.
We will discuss Taking Action and Staying Consistent in my next post on Friday, December 26th.
That’s all for your Financial Fitness today!
Until next time — take care and stay financially fit!
