Giving Yourself a Debt Workout

You know the feeling. You are not sleeping at night. You refuse to answer the phone in case it is a bill collector. You are in way over your head. You need help!

Times are tight for everyone. Electricity rates are soaring. A fill-up at the gas station costs more for some than a trip to the doctor. Heating bills are skyrocketing. Interest rates have gone through the roof. Meanwhile, you are one of a lucky number who did not lose a job to the most recent transfer of jobs over seas, but that doesn’t mean you are getting a raise!

You need financial help. You need that help fast. What you may not be aware of is that your lawyer or debt counselor can approach credit card companies, banks, and other financial institutions and ask fo.r a debt workout plan that works for you. While it may be difficult to swallow your pride and ask for this help, it can be the step you need to take in order to get your life back into order and your finances under control.

What is a debt workout you wonder? It’s pretty simple. If you make $300 a week and have to pay $300 a month on your credit card, bank loan, or other line of credit, odds are high that you cannot meet those obligations and you may be starting to feel like your finances are spiraling out of control.

By talking to a debt counselor or financial attorney, you may qualify for a debt workout. In a debt workout, the credit card company agrees to lower your balance owed or interest rate and you promise to pay off the balance as normal. A mortgage or car loan company agrees to either reduce the amount owed or give you a longer amount of time in which you can pay back the balance. By making these changes to your previous agreement, it becomes easier for you to repay your debts.

You may ask yourself why on earth would a credit card company or financial institution agree to such a thing. The answer is clear. If you file bankruptcy, they get nothing. You keep your house, car, and personal items, and the banks and credit card companies have to swallow that loss of money. If you ask for a debt workout, they will not get as much in interest charges, but they will still get back the money you owe in most cases.

It is a win-win situation. During a debt workout, your monthly payment is decreased. You will find it easier to make scheduled payments. You can still afford groceries, heat, electricity, mortgage/rent, and not have to file for bankruptcy. The company offering you a line of credit get a good portion of the money you owe, so they will be happy with the settlement as well. In addition, it help prevent causing a black mark to appear on your credit report because you failed to repay your debts.