It can be a short or long-term problem that can happen to anyone at any time: debt – from credit cards, loans, utilities, rent, mortgage, you name it!   Knowing it’s common is reassuring, but is of no practical help if it happens to you, so here are five action points to help with debt problems and get you back into the black:

1.      Don’t ignore a debt problem:

Many people are tempted to whisk bills into a forgotten drawer once they land on the doormat, rather than dealing with them, but this is no resolution – hiding or ignoring your bills can allow interest to build up, pushing you farther into debt.   Open your bills and spend some time going through them, so that you have a good idea of where your debts lie: this action costs you nothing but can be the first step in rectifying the situation.

2.      Draw up a list of your monthly income and outgoings:

Include all of your essential items that must be paid, including rent or mortgage, food and basic utilities, be realistic but not extravagant: make cuts in your actual spending as you go. Once you have deducted your essential outgoings from your income, you will have a better idea of how much you have left each month to pay off your debts with.

3.      If you find you don’t have enough left to pay off the minimum payment required by your creditors, you may want to ask a debt negotiation company to step in on your behalf.  Help from these companies usually costs nothing and, as well as helping you to draw up a debt repayment plan, many also offer debt negotiation services, where they contact your creditors on your behalf in order to agree affordable regular payments with them.  Even if the sum you can offer is much less than the usual minimum payment required, many creditors are happy to accept this as it will still cost them far less than taking you to court!

4.      Another aspect that debt advisors may be able to negotiate on your behalf is to agree an aspect of debt relief.  In some cases, this means a waiver of some part of the debt but, more commonly, this comes in the form of having interest ‘frozen’ on the account, so that you do not continue to accrue interest over the period of difficulty.  This kind of debt relief should definitely be requested if you have negotiated a lower regular payment: there’s no point in paying at a lower rate if the interest on the balance is still being piled on!

5.      Although some people find it helpful to discuss debt with a professional stranger, such as a debt advisor, this should not be a substitute for sharing the problem with someone close to you, especially if you share a household.  One of the most stressful aspects of a debt problem can be the frustration, embarrassment, or even shame that some people experience and all of this can be exacerbated if you are sharing a household with someone who is oblivious to the problem and is happily spending and expecting a certain standard of living, whilst you are scrimping and quietly panicking.  If there is a problem with debt in the household, you do need to share it, so that everyone can pull together to reduce spending and minimise the debt.

Lastly, the key thing to help with debt problems is to minimise your spending.  Think seriously about how and where you can make cuts in your spending and work on these a day at a time – make ‘no spend’ days a personal challenge and see how many of these you can achieve from month to month, to help reduce both spending and the build up of further debt.

In today’s ever uncertain economic climate, more and more people are seeking debt management and debt relief programs in order to reclaim control of their finances. Historically, debt relief has referred to agreements between nations, for example the Third World Debt which developed from the Latin American Debt Crisis in 1982. More recently however, registered individuals and companies have been set up to combat private and individual debt, and have actually maintained business growth in spite of the economic downturn.

There are two important factors to consider when undertaking a debt relief program: firstly, it is crucial to understand the level and type of your debt, and therefore the best way to effectively manage it. Once this is done, it must be ensured that any company you select to manage your finances are registered and offer legitimate debt relief programs. Taking these significant steps will not only maintain your peace of mind but also help to clear any debt problems that may persist in the most efficient and painless way.

Types of Debt Relief

In contemporary terms, a debt consolidation service is the most commonly proffered solution to personal debt. This, if done correctly, entails paying a company one single manageable sum to cover all your outgoing payments. The amount payable is calculated on your total monthly debt and, more importantly, your monthly incoming amount. This confirms that you are both eligible for the program that ultimately pay a sum of money that is affordable. Most companies offer this along with other auxiliary options for the consumer, allowing those in debt to tackle an array of financial issues. Freedom Debt Relief, an American company, one of the most prominent operators in this market and have developed several payment plans.

Credit cards are the primary influence in personal debt, with reports for 2010 suggesting the credit card debt levels have reached $26.2 billion worldwide. As cash flow has suffered, plastic wealth has flourished and credit card debt relief is now a key factor in the services offered by financial organizations. This has been designed to aid consumer debt relief and reduce the levels of money owed credit card companies.

Tax Debt Relief

Another significant factor in both personal and business debt is delayed or delinquent tax returns. The nature of the economy has forced the IRS to adopt more an ever aggressive approach to the payment of tax and back taxes, forcing in turn a vicious cycle of more and more debt. Options do exist in this instance for those who have fallen behind with their tax returns. There are specialist tax resolution officers or lawyers who can advise and help negotiate a payment plan on your behalf with the IRS, minimizing the risk of collection or the instigation of criminal processes.

Facing Debt Issues and the Future

For all the solutions available to today’s financial crisis, the key to tackling your personal debt is to understand it and face it head on. Communicate with your creditors, and with legitimate debt relief advice and support, work out the most effective efficient way to resolve the issues.