Getting Out From Under Debt


Are you facing problems managing a heavy debt load? If so, you’re not alone. Households with credit cards had an average of nearly $11,000 in debt in those accounts, according to the latest figures from the Nilson Report, which follows credit card transactions. In addition, job loss or upward adjustments to mortgage payments have left many people wondering how to pay off their monthly bills. The Virginia Society of CPAs offers some tips to help you emerge from indebtedness and do a reality check on your spending.

Make a call

There are a number of steps you should take if you are unable to keep up with your payments. Start by contacting your creditors — whether the mortgage lender, utility company or credit card issuer — and explaining your situation to them. These businesses would prefer to keep you as a paying customer, so they are often willing to work out alternative plans. These might include debt moratoriums, in which you defer paying your bills for a certain period until you’re back on your feet, or payment plans, in which you lower your monthly bill by stretching out your payments.

Also be sure to ask your credit card company about lowering your interest rate, a step that could also reduce your monthly outlays. No matter what kind of help you are seeking, don’t be afraid to have an honest conversation with your creditor, because they may be willing to help. These simple steps will also likely end calls from creditors asking about payments, which should reduce stress and make it possible for you to concentrate on getting back on your feet.

Seek help

A reputable credit counselor can assist you in negotiating with your creditors or putting together a realistic budget that can bring you through your current crisis and get you on sound footing for the future. The National Foundation for Credit Counseling can help you find a reputable counselor in your community who will offer free or low-cost advice. Contact them at (800) 388-2227 or learn more at www.nfcc.org. Be aware that there are many scam credit counseling operations that make unrealistic promises about lowering your interest rate or getting your debt reduced or forgiven altogether. Be very cautious if a company’s offers sound too good to be true or if a hefty upfront payment is required.

Start fresh

Whether you are in debt because of poor spending habits or an unexpected financial crisis, this is a good time to prepare a budget that reflects your current situation. In the next month, keep a list of everything you spend each day. You may be amazed at the number of unnecessary expenses that have crept into your budget. At the end of that month, review the list and decide how you can change your habits so that you will cut back on the things you don’t really need.

Get more information

Need more personal finance tips? The Virginia CPAs offer consumer tips as part of its award-winning financial literacy initiative called Financial Fitness (www.FinancialFitness.org). This initiative is part of a national effort of the CPA profession to improve the financial understanding of Americans.

Your CPA can help

Whether you are trying to get a handle on debt or address another important financial concern, be sure to turn to your local CPA. Your CPA can provide the advice you need to make important financial decisions.

The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association dedicated to enhancing the success of CPAs. Founded in 1909, the VSCPA has 9,000 members who work in public accounting, industry, government and education. For general information, please visit the Press Room on the VSCPA website at www.vscpa.com, e-mail vscpa@vscpa.com or call (804) 612-9424. To search for a CPA in your geographic region, visit www.FinancialFitness.org and click on “Find a CPA.”

©American Institute of Certified Public Accountants

LAST UPDATED 4/29/2010
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