In doing research on the previous post titled, Making Money Go Further, I was struck by the title, Knee Deep in Debt.  This is actually a most useful article from the Federal Trade Commission in the US.  It is very straight advice for those who perhaps are struggling and feel they are mired in debt.

As it mentions, many people face a financial crisis at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.

They then discuss a number of options that may be helpful depending on the level of debt, the amount of personal discipline, and  the prospects for the future.  The options that they cover in some detail are:

• Realistic Budgeting -  The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.
• Credit Counseling from a reputable organization -  If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization.
• Debt Management Plans – A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money.
• Debt Consolidation – You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. These loans require you to put up your home as collateral. If payments are not made on time you could lose your home.
• Bankruptcy – The debt management option of last resort because the results are long-lasting and far reaching.

As they caution, if you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.

A good agency will cover not only debt counseling, but will review the family budget and advise on the best way to manage personal finances and pay off credit card debts.  It provides detailed financial education on money management, household budgeting and other issues that affect credit ratings.

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