F) GETTING HELP FROM A PROFESSIONAL
There comes a time when a consumer should realize that it is time to seek help from a credit professional. This occurs when there is difficulty in meeting expenses. Consumers in debt usually take the first step by attempting to help themselves. They try to cut back on expenses and monitor their accounts more closely. However, many fail at this first step. They find it difficult to control their finances because such action requires discipline. These consumers need a financial “trainer” to guide them in controlling their finances. There are signs to look for to determine if your finances have become unmanageable. These indications include the following:
1. Decrease in income with increase in credit card balances.
2. You are near or over the limit on your credit card balances.
3. You pay the minimum, or less, on your credit card balances.
4. You have too many credit cards with too much available credit.
You apply for more cards and take cash advances to pay for existing cards.
5. You charge more on your cards than you make in payments each month.
6. You cannot make all your payments.
7. You do not know how much you owe and do not seek to find out.
8. You hide your statements from your significant other.
9. Creditors call you and send letters about delinquent payments.
10. You use your cards because you do not have cash to pay for necessities.
11. You use your savings or borrow from retirement funds to pay your bills.
12. You sign up for every credit card offer sent to you in the mail.
13. You have lost your job and have no reserve fund to pay your bills.
Look For A Pattern
There is no set number of signs listed above that will show that you have credit problems. You may still be able to deal with your problems if several of these signs describe your situation. However, if these signs exist for several months, you likely are having credit problems that must be addressed. You should not panic if you spot a trend. Anyone can experience a temporary financial problem. You must act to address it in a responsible manner. Do not look to immediately declare bankruptcy or to take out a loan to pay your debts. You should examine your money management and speak with a credit counselor to see if your situation qualifies you for help. You may not need assistance. You may just need to change your habits or address a temporary cash flow problem.
The most important thing to remember when a pattern occurs is to avoid procrastinating. Do not wait to address your problem. The sooner that you examine your money management skills and seek help, then the sooner you can obtain relief. The best time to seek credit counseling is when a few signs exist. Before seeking a credit counselor the consumer should make a list to include his or her income, savings, debts owed, monthly payments, and other expenses. This list can be used to analyze the financial situation. The credit counselor will use this information, as well as look for the roots causes of the situation. At that point the counselor will determine the best approach to address the problem and will help you to develop a budget plan.
Consumers who fail to timely pay their credit card payments are often assessed late fees. Late fees are often $29 or higher. These fees only will be removed after the first instance. These fees added to your balance make it more difficult to pay down debts.
Financial damage gets more serious when consumers completely miss payments and fall more than 30 days behind on their bills. The creditors expect the consumer to pay the missed payment, the late fees and the next payment when the next payment comes due. This results in the consumer owing more than double the original payment for the next month. At this point creditors express concern that the consumer will not pay the account and that there is a risk of not receiving the money owed. Additionally, creditors will often raise your interest rate if you miss payments or are late with payments. The terms you agree to when you apply for the credit card permit the creditors to take this action.
Also, when a consumer is more than 30 days late on a payment, creditors will report accounts as 30 days delinquent when reporting to the credit reporting agencies, also known as the credit bureaus. If a consumer fails to make the next payment in full the creditor will likely report the account as 60 days delinquent and 90 days delinquent after the next failure to pay the full minimum amount owed. These negative reports remain on a consumers credit report for seven years. The negative reports will remain even if you close out the card. These negative reports lower a credit score and result in a higher cost through higher interest rates when a consumer seeks to borrow in the future. Thus, the cost of owning a car or home will skyrocket if you have a late payment history.
It is a good idea to reach out to the credit card issuer if you expect to be late with a payment. You should inform the credit card issuer of the circumstances and request some type of relief. The credit card issuer may, at this point, be willing to temporarily lower your payment or change your due date. However, you should not make a commitment that you cannot keep. Your creditors will have noted the conversation and will be less willing to assist you in the future if you do not keep your word.
Although a long history of on-time payments does factor in when seeking relief from a creditor, you must contact the creditor before your problem gets too severe. For example, a long on-time payment history likely will not matter if you contact the creditor after you have fallen behind two payments on your account. One late payment of 30 days will hurt your credit history, but more than one late payment will cause more severe damage. Developing a pattern of paying late will definitely destroy your credit history. Thus, the sooner you get your situation under control, the more likely you can salvage your credit history. In fact, credit counselors often are able to have creditors re-age accounts back to current without the need to make extra payments.