Credit and Debt Blog

(Dal from Maryland) I am current on my credit card payments, however I am getting close to being late on some. What should I do?

Dal, you should take action quickly to avoid falling behind. The types of action that you should take depend on your own unique situation. This may include taking into account the current cause for your financial troubles.

If you are about to fall behind because you have lost a substantial amount of household income, then you should understand that your options will depend on your ability to replace that income. Quickly finding another job would mean that you might be able to avoid falling behind.

A household that lacks savings and cannot reasonably expect to restore income within the next 6 months may even be forced into bankruptcy if the debt is high enough. If the situation is hopeless, then you might want to speak with an attorney prior to sending out your last dollars to your creditors.

I have to tell you that the best option is to be able to maintain your income and pay down your debts on your own. However, if you feel that you have been dealing with debt for a number of years and cannot seem to make a dent in your debt, it is most definitely time for credit counseling.

You might need the benefits of lower interest rates and resulting lower minimum payments in order to give your family some breathing room each month. You usually can see a drop in payments that allows for you to balance your budget. This may not be the “save 60%” scenario that rogue companies claim on television commercials. A more typical scenario might show you paying around $400 a month when your current monthly payments are $500 a month.

Some clients see a greater reduction in their monthly payment and others see nothing at all. You could even see a higher monthly payment if the particular creditors that you owe provide lowsy benefits.

Creditor benefits have been getting better since 2007 as they try to reduce their default rates. By giving you a little bit of help in your interest rates and payments, they are hoping that you can repay your debt and avoid messy collection activities.

I would recommend contacting a credit counselor in order to see how your situation fares. They can let you know which options for handling your debt accounts are the most feasible for your situation.