Your Guide to Understanding Debt and Credit
Expert tips on managing debt, choosing credit cards, and maximizing your financial health
Empowering You to Manage Your Debt Wisely
Debt Management Program Overview
This article provides a comprehensive guide to effective debt management strategies.
Three Steps to Managing and Getting Out of Debt (DFPI)
This article outlines a straightforward three-step approach to managing and eliminating debt.
How to Get Out of Debt: 11 Ways to Be Debt-Free Faster (EarnIn)
This article presents eleven practical tips for effective debt management, aimed at helping individuals achieve financial freedom
Debt Management Tips
Create and Stick to a Budget
Establishing a budget is essential for effective debt management. Start by tracking your income and expenses to understand where your money goes each month. Identify necessary expenditures, such as housing and utilities, and allocate funds accordingly. By cutting unnecessary expenses and prioritizing debt repayments, you can create a sustainable financial plan that helps you regain control over your finances.
Prioritize High-Interest Debt
When managing multiple debts, prioritize repayment based on interest rates or outstanding balances. The debt snowball method focuses on paying off the smallest debts first to build motivation, while the debt avalanche method targets high-interest debts to minimize overall costs. Choose a strategy that aligns with your financial situation and stick to it, ensuring consistent progress toward becoming debt-free.
Consider Debt Consolidation
If debt becomes overwhelming, consider seeking assistance from a financial advisor or credit counseling service. These professionals can provide tailored advice and help you develop a personalized debt management plan. They may also negotiate with creditors on your behalf to secure lower interest rates or more manageable payment terms, making it easier for you to tackle your debts effectively.
Statistics & Trends
The trends indicate that both government and consumer debts are on the rise in the U.S., driven by various economic factors and policy decisions
- Total U.S. debt reached $35.46 trillion as of September 2024.
- Average credit card debt per cardholder is $7,236 in Q3 2024.
- Credit card balances exceeded $1 trillion for the first time in history.
FAQs Section
Will I Get Sued By My Creditors?
There is a slight possibility that a creditor might sue you. But, lawsuits are expensive and creditors try to avoid them. We aim to complete the program as quickly as possible to avoid any lawsuits.
How Long Will It Take To Get Out Of Debt?
It depends on how quickly you can build up your funds and save for the settlement offers. The faster you save, the quicker you get out of debt. It typically takes between 24-48 months with our program. By contrast, if you only make the minimum payments on your credit cards, you could be in debt for the next 10-20 years and pay back 2x, 3x, or even 4x as much as you originally borrowed.
Can I Continue To Use My Credit Cards?
No, you won’t be able to use your credit cards that are enrolled in the program. Plus, creditors will usually close your accounts after you’ve missed a few payments. Your debt expert will help you decide the best plan of action based on your current financial situation.
Will I Have To Pay Taxes On The Forgiven Debt?
That depends. Your creditors will issue you a 1099-C form for any debt forgiven over $600. The forgiven debt counts as income. But, if you are insolvent (you have more liabilities than assets) at the time we settle with your creditors, you may not have to pay any taxes on the forgiven debt. “A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. The forgiven debt may be excluded as income under the ‘insolvency’ exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent.” – IRS.gov
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