News
ENLARGE
If you're making only minimum monthly payments or have skipped one or more, if you keep charging things to credit cards that are nearly maxed out, if you keep checking your available credit or if you avoid taking phone calls until you check caller ID, these are signs you could be overloaded with debt.
Before you get to that point, though, you may experience extra stress, lack of sleep, fear of opening the mail — all clues that your spending may be out of control.
Before the situation gets critical, you might consider getting credit counseling. A credit counselor will go over your financial situation and talk with you about how you got into the situation. This is crucial because if consideration isn't given to how you spent your way into debt, it likely will happen again.
Ideally, the counselor will contact your creditors and arrange a debt management plan that could include lower interest rates or monthly payments. Past-due accounts will be re-aged to bring them current. You'll be required in most cases to close the accounts in question. With the new payment arrangements you'll have an opportunity to pay on time and build new, positive credit.
For problems you want to handle yourself, many people choose debt settlement as a way of reducing debt. This is where the creditor agrees to take a portion of the amount you owe and cancel it while you make smaller payments on the remaining balance.
Debt settlement, however, can get you a Form 1099-C, and you'll pay taxes on the forgiven amount, as it's added to your income. If you get one of these, talk to your tax preparer and ask about filing a Form 982. You maybe be able to reduce the taxable amount of the forgiven debt. That's not to say all will be well.
Settled accounts and those under a debt management program will stay on your credit report for many years, nearly as long as a bankruptcy, and it might be difficult to get loans as long as those stay on your report.
No matter which way you choose to handle the problem, the faster you get a grip on your financial problems, the faster the stresses will go away. And that counts for a lot.
David Uffington regrets that he cannot personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.
© 2010 King Features Synd., Inc.
Before you get to that point, though, you may experience extra stress, lack of sleep, fear of opening the mail — all clues that your spending may be out of control.
Before the situation gets critical, you might consider getting credit counseling. A credit counselor will go over your financial situation and talk with you about how you got into the situation. This is crucial because if consideration isn't given to how you spent your way into debt, it likely will happen again.
Ideally, the counselor will contact your creditors and arrange a debt management plan that could include lower interest rates or monthly payments. Past-due accounts will be re-aged to bring them current. You'll be required in most cases to close the accounts in question. With the new payment arrangements you'll have an opportunity to pay on time and build new, positive credit.
For problems you want to handle yourself, many people choose debt settlement as a way of reducing debt. This is where the creditor agrees to take a portion of the amount you owe and cancel it while you make smaller payments on the remaining balance.
Debt settlement, however, can get you a Form 1099-C, and you'll pay taxes on the forgiven amount, as it's added to your income. If you get one of these, talk to your tax preparer and ask about filing a Form 982. You maybe be able to reduce the taxable amount of the forgiven debt. That's not to say all will be well.
Settled accounts and those under a debt management program will stay on your credit report for many years, nearly as long as a bankruptcy, and it might be difficult to get loans as long as those stay on your report.
No matter which way you choose to handle the problem, the faster you get a grip on your financial problems, the faster the stresses will go away. And that counts for a lot.
David Uffington regrets that he cannot personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.
© 2010 King Features Synd., Inc.
