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Dealing with Debt Mediation By Paul Ritz Over-indebtedness is a serious problem facing many Americans today. It has been said that most families are only a paycheck or two away from bankruptcy. The problem with debt is that it becomes a vicious cycle. Debt mediation can help break the cycle.

The Cycle of Debt With gas prices and food prices rising, people are battling even more to meet their monthly commitments. People then use credit to help them meet their monthly commitments. This, in turn, increases the amounts that need to be paid monthly and the whole cycle starts again.

Breaking the Cycle The first thing to do is to stop borrowing money - although a short-term loan may improve your situation for the moment, it will make it a lot worse in the long term.

Get the Overall Picture You need a proper picture of what is going on financially – make a complete list of all your monthly expenses and your monthly income. Categorize your expenses in terms of whether they are essential – such as rent, power, etc. or debt repayments. If you are reading this article, chances are that you have too much month at the end of your money. To break the debt cycle, you are going to have to do one of two things – increase your income or decrease your expenses. A combination of the two is best.

Increasing your Income This is not so easy – if it was, you wouldn’t be having problems with debt. That said, it is a good idea to look at ways of earning extra money – you could look for a better paying job, a second job or look towards making money from home. The most important thing is that you shouldn’t have to spend a lot of money in order to make more – do not go into more debt.

Decreasing your Expenses You do need to tighten your belt – can you move into a less expensive home? Are there any other cutbacks you can make? Be ruthless if you are serious about your financial future.

Getting Professional Help If, after all of this, you still can’t see the light of day, you may need professional help. A professional debt management company may be able to help you to keep your head above water. Debt mediation may be a viable option for you.


How do Debt Relief Programs Work? You will start off with a consultation with one of the debt relief consultants. This will involve giving them details of all of the debt that you currently have. It is vital to be completely open and upfront with them – if you are not, they won’t be able to find the right solution for you. There is no need to be embarrassed about asking for help – you are certainly not the only one battling with debt. The consultant will then analyze your income and expenses and sort out the vital expenses from those that are purely debt-based. They will come up with a proposed repayment plan for the debt portion of your expenses depending on how much you are able to pay. They will then approach your creditors and try to arrange a settlement offer with them. They generally negotiate with your creditors on your behalf in order to get a portion of your debt forgiven or will negotiate better interest rates.

Why Would a Creditor go for this? The primary concern for the creditor is to get their money back. If the settlement agreement makes sense, they may accept it as the alternative is likely to mean that you would have to file for bankruptcy. This way, they are likely to get more of their money back.

What is the Advantage to you? You will have a reduced installment to pay. Your overall debt would also be decreased. This is important – should you negotiate a reduced payment arrangement for the full amount of the debt, it would take ages to repay it. A reduced amount of debt means that you will be able to repay it faster. Often, the creditors will also reduce or forgive the late payment fees and be more lenient in terms of the interest rate – they will generally look at ways to actively stop the debt from mounting up. This could also mean them not handing your over to collection agencies and the fees involved there. (This is not always guaranteed though.)

What is the Disadvantage? The debt is going to take a while to repay and your credit rating is going to suffer – you will find it next to impossible to get more credit temporarily. Once you are out of debt, you can quickly rebuild your credit. It also doesn’t stop the creditors phoning you to collect their money although you do have recourse if they are harassing you. The debt relief companies aren’t going to do this for nothing – there are fees involved. If, however, you take into consideration the late payment fees, etc. that you will save yourself, it is not that expensive. A good company will base its fees on the amount that they save you and so are more motivated to get you the best possible deal. Some people find that debt mediation is a real lifesaver – it is well worth considering.


1-888-703-4948 www.nationaldebtrelief.com


Dealing with debt mediation