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3 steps you need to take to get out of debt now
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goldengirlfinance.ca
If you find yourself riddled with debt, you're not alone. Human beings naturally suck at budgeting, especially in today's consumer-driven world. At some point though, no matter how you slice it, you can only live above your actual income for so long; eventually the credit runs out. If creditors are calling you, this is a sign that you are having trouble keeping up. This could also mean that your credit score is being affected. [More: Billionaire to broke: One woman's story (and what you can learn from it)]
Here are the first 3 steps you need to take to get back on a financially sound track, from Debt Expert Stephanie Holmes-Winton:
1. Call your creditors! If the above scenario describes you, pick up the phone - pronto. You need to keep the lines of communication open. If you are getting calls from creditors, you must be missing payments and that is a big no-no for healthy credit. So call every one of them, tell them what is going on, why you are having trouble, and ask if there is anything you can work out with them temporarily while you see what you can do about your cash flow. They want their money back; they don't want to force you into bankruptcy. [More: Answers and advice from debt expert Stephanie Holmes-Winton]
2. Pull your credit score. It will cost you, but you should go online to Equifax or TransUnion and request a copy of your credit score (not the free report but your credit score). You'll be able to see if your creditors are reporting you as having made late payments, or if your credit is still in good shape ... for now. [More: $60K in consumer debt (and how to get out of it in less than 5 years)]
3. See a non-profit credit counsellor. Going bankrupt isn't just something you can do; you must qualify to do so. Your best and least costly first step would be to do the first two things above, and then make contact with a non-profit credit counsellor. Non-profit doesn't necessarily mean free. If you are at the stage where you are missing payments and considering bankruptcy, your best investment could be some time with a credit counsellor.
They should:
Offer a free counselling session.
Explain any fees to you upfront.
Help you budget and create a spending plan.
May be able to help you work with your creditors to create a repayment plan you can manage.
Refer you to a trustee in bankruptcy if you are at that point of no return.
You can visit the Canadian Association of Credit Counselling Services at caccs.ca to find an accredited non-profit agency near you. [More: Your credit score: Why good financial behaviour can actually drag it down]
It's about whittling away the debt that's weighing you down — starting now.
GoldenGirlFinance.ca is a free personal finance and education site for women.
Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial or legal strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances, as well as fully aware of current laws and regulations.
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