- A great deal of time is spent adding up monthly bills and figuring out how to pay them.
- Sleep is lost due to concern about mounting debt and meeting debt obligations
- Late or missed payments are becoming rather regular occurrences
- Monthly bill payment activity causes stress and anxiety
- Develop a budget based upon income and regular monthly expenses. Each monthly expense will be listed, including when during the month it is to be paid and out of which paycheck, if there is more than one paycheck a month. An amount from each paycheck can also be earmarked for savings if income allows this.
- There will be continual follow-up with the consumer to ensure that the budget plan is being followed and that there is no “backsliding” into old habits of irresponsibility.
- In some instances, the outrageously irresponsible spender may have to turn over his/her paycheck to the counselor, who pays all bills and gives an “allowance” to the spender for groceries, gas and other personal items.
Debt settlement is used when debt has become so cumbersome, that current income cannot meet all of the demand for payment. It is often difficult for an individual to perform this service for himself, so services of a settlement professional may be warranted. This individual is responsible for contacting all creditors and attempting to settle the existing debt for a much lower amount. There are fees involved for this service, and usually a debt consolidation loan is secured to payoff the settled debt amounts, but the debtor then becomes free of the old debt while making one lower payment to pay off the consolidation loan and the fees of the professional. It is important to remember that debt settlement will affect credit in a negative way for a period of time. Once the consolidation loan is paid off, it is wise to re-establish credit slowly by securing small amounts of debt that are paid off in a responsible manner.