Tips and Tricks for Getting Out of Hot Water with Creditors

Do you, like millions of other Australians, feel like you're sinking in an ocean of credit card debt?
Well, fear not - there are many options for reducing your debt way before you have to be concerned about receiving notices or daunting telephone calls from debt collectors.
The important thing to remember is to be proactive in handling your credit card debt.
Unmanaged debt can ultimately lead to lawsuits, loss of property, and tarnished credit reports.

Here are a few ideas for managing and/or reducing your debt:

- Get in touch with creditors right away.
Often times, creditors will reduce credit card interest rates if you simply ask for a break.
Explain your situation, and let creditors know if you're having trouble meeting your minimum monthly obligation.
Many creditors will work with you to arrange a customized payment plan.

- Develop a budget.
While many people dread this very important step in reducing debt, it can be extremely important in taking control of your financial situation.
Compare and contrast fixed expenses-mortgage payments, rent, car payments, and insurance premiums - for example, with variable expenses, such as entertainment and recreation.
List all your expenses, even those that seem unimportant.
This is an important step in determining your spending patterns, prioritizing expenses, and determining whether or not you have additional money to contribute to the monthly payments on your credit card.

-Consolidate, consolidate, consolidate.
While debt consolidation is a sometimes daunting and drastic step, it can be an important move in the quest to reduce your credit card debt.
If you're a homeowner, consider a second mortgage or a home equity loan to pay off high-interest rate debt.
While these loans often require you to list your home as collateral, remember that if you start skipping out on credit card payments, you could easily lose your home.

-Go to counseling.
Credit counseling, that is.
Many credit counseling organizations will help you come up with a feasible solution for ridding yourself of debt.
You can find credit counselors on the Internet, and many credit unions and universities provide credit counseling programs.

Also, get in touch with your bank, friends, and/or family for a recommendation.
Some of the services credit counselors provide: Advice on how to manage your debt, assistance in developing a budget, and classes and workshops that are geared towards teaching consumers about money management, credit card debt, and budgeting.
Counselors can also recommend a debt management plan (DMP), which allows you to make monthly deposits to the specific counseling organization that you're working with.
Your counselor will then develop a payment schedule with your creditors that includes lower interest rates or waives certain fees.

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