Handing too much credit debt

Sometimes we just can't get out of debt. Situations beyond our control can arise and overwhelm us. Uninsured medical bills, a loss of business, or unemployment can happen to anyone. The natural reaction may be to cover your head and hide, but you'll usually be offered help if you genuinely try to remedy the situation.

There are three options:

Talk directly with creditors
The people to whom you owe money (your creditors) are motivated by two needs: to be repaid and to keep you as a customer. This tends to work in your favor.

Legally, as soon as you default on a debt (e.g., make a late payment), the creditor has the right to ask you to repay the entire debt. That rarely happens because the creditor is interested in building a relationship with you and selling more products or services. Most creditors, therefore, will listen if you ask for help in structuring a new repayment plan. For example, they may grant an extension of time or reduce payment amounts (and increase the number of payments).

If you're late paying, creditors typically send you form letters as polite reminders. If you still don't pay, they send letters with increasing intensity, or they call you on the phone. Eventually, a creditor will make demands, backed by the threat of action (such as a lawsuit or collection process).

Get outside help
If you work directly with a creditor, you could enlist help from:

A local credit counseling service. Find a service that is associated with the Consumer Credit Counseling Service (CCCS), a non-profit organization supported partly by the credit industry. For a small fee, a counselor acts as a go-between with your creditors and helps set up a workable repayment plan.

Mediation. Becoming more popular is the use of a neutral third party to help you and the creditor open a line of communication and resolve your own dispute. It's very informal; the mediator can't three either side to do anything.

Arbitration. You and the creditor can agree to argue before a neutral third party (often a lawyer or judge). If it's not for a lot of money, the process is informal and probably doesn't require a lawyer. Both you and the creditor are bound by the decision (and the winner may also win a refund of the arbitration fee).

Deal with bill collectors
The last resort of any credit other than suing you (which may not be economically feasible), is to hand over your debt to a collection agency. These people aren't interested in keeping you as a customer. They're paid for results and have one goal: to recoup as much debt as they can.

Your rights. Bill collectors are restricted by the Fair Debt Collection Practices Act, which applies to everyone who collects consumer debt for someone else, including attorneys. Here are some laws:

• You have the right to tell collectors not to contact you again. After that they can only call to say collection efforts have ended or that you're going to be sued.

• They can't threaten violence or use obscene or profane language.

• They can't contact you at work, and they can only call you at home between S am anti 9 put. Even then, they can't pester you on the phone.

• They can't put any markings on the outside of a letter or postcard that would reveal they're trying to collect a debt.

• They can't mislead you into repaying a debt.

Note:
Help from the government. If you feel you're being treated unfairly, you can invoke your rights by contacting the Federal Trade Commission (2O2-326-2222). It always helps to have a witness or some documented proof to verity your claim.

Debt consolidation. Debt consolidators-businesses that charge a fee to combine your debts and help you manage paying them off-are prohibited in most states and regulated in others. Apparently, most of these businesses are really looking to find ways to charge you high interest and fees. Non-profit organizations are exempt from these state laws.