Are you struggling to pay your debts each month? Do you feel hopeless when you think about your financial situation? Do you wish there was someone who could help you with debt management in Eagan, MN? If so, you are not alone. Many people are facing the same debt management problems that you are facing. They do not have the money each month to pay their living expenses, bills, and debts. The stress and anxiety from dealing with their financial problems leaves them feeling hopeless and defeated.
The bankruptcy attorneys at Kain & Scott want you to know that you are not alone. There are people who you can turn to for debt management help. The first step in improving your financial well-being is acknowledging the issue and then seeking help from a reliable source.
What is Debt Management?
According to Investor Words, the definition of debt management is:
"A unique strategy developed to help a debtor manage their debt. This strategy is usually developed and implemented by an outside company or organization on behalf of the debtor, usually because the debtor is unable to sufficiently manage their debt on their own, due to lack of knowledge or because they are overwhelmed by the amount of debt."
Of course, you do have the option of being your own debt manager; however, unless you have the time, skills, knowledge, experience, and resources needed to develop a successful strategy for resolving your debt problems, you probably need the assistance of a debt management professional.
Choosing a Debt Management Professional
When you need help with debt management, you have several options available. Because each person's financial situation is unique, there is no right or wrong answer to the question, "Who should I hire to help me with my debt management problems?"
A financial advisor provides advice on all financial matters ranging from creating budgets and planning for retirement to paying down debt and investing. Some financial advisors also act as an agent to invest your money and manage your investment and/or retirement portfolios. Unfortunately, it can be costly to hire a financial advisor. This may make this option impractical if you are struggling to pay your bills. However, financial advisors are a great option once you are back on your feet and you want to make the most of your money and plan for your future.
Debt Settlement Companies
Debt settlement companies provide debt negotiation services for their customers. They work with your credits to negotiate a lower payment in satisfaction of your debt. Many of these companies have extensive experience negotiating with creditors. There are several disadvantages to working with a debt settlement company including expensive fees, creditors refusing to work with the company; and, potential tax consequences on the debts that are settled.
Debt Consolidation Companies
The debt management plan proposed by these companies is to give you a loan large enough to pay off all of you other debts. You have one payment each month that is lower than all of the other payments combined. Unfortunately, you pay expensive closing fees for the loan and the company requires collateral for the loan (i.e. your home). This puts your home at risk if you are unable to make the payments on the debt consolidation loan. Another downside to this type of plan is that you may pay more money than you owe right now due to interest payments.
Credit counseling is another form of debt management that may work for some people. A credit counselor reviews your income, expenses, assets, and debts with you to evaluate your current financial position. The counselor helps you develop a budget, provides tips and suggestions about saving money and reducing costs, and reviews other debt relief alternatives. You may qualify for this service at no charge; however, this is more about providing you with information and a few tips about debt management than actually solving your debt problem.
A bankruptcy attorney will discuss your bankruptcy options for debt management; however, our attorneys also discuss your non-bankruptcy options, if applicable. Because we offer free consultations, it does not cost you anything to get our advice. Bankruptcy is not always the best option for debt management but, in many cases, it is the only option for some individuals who cannot afford to pay their debts under any type of debt management plan.
Bankruptcy offers individuals a fresh start to rebuild their finances on a clean slate. It also offers immediate relief from foreclosure, repossession, creditor harassment, and other forms of debt collection. Other debt management plans cannot offer that immediate relief. Bankruptcy protects your property by preventing creditors from taking action to collect debts once the bankruptcy case is filed. Once a debt is discharged in bankruptcy, the creditor cannot take any action to collect that debt in the future. Unlike debt settlement plans, you are not required to pay income taxes on discharged debts through bankruptcy.
Each person's financial situation is different; therefore, your best option is to speak with one of our experienced bankruptcy attorneys to determine the best course of action to resolve your debt problem.