Digging Out of Debt

It's easy to fall into debt--especially if you are facing increased costs because of a seizure disorder. What can you do if you know you're carrying around too much debt?

First, don't feel overwhelmed. Debt can be managed. Start by taking some of the following steps:

• If you are in debt to a few businesses, call and ask them if you can make smaller payments--at least for a while. Most businesses will be more willing to work with you if you make arrangements before you miss a payment.
• Organize your debts in order from the highest interest charged to the lowest (this worksheet may help). Pay minimum amounts due on all the debts; but put any extra money toward the debt with the highest interest rate. When that debt is paid off, move that payment onto the next debt with the highest interest rate. In time, you will pay off your debts and save in interest payments
• If you owe money to many businesses and the balances don't seem to be getting any smaller, it may be time for outside help. Nonprofit debt counseling groups such as Consumer Credit Counseling Services (CCCS) can help you set up a repayment plan. These groups charge no fee or a low fee for their services. Call (800) 388-2227 or visit the National Foundation for Credit Counseling Service Web site.
• Own only one major credit card and use it only for emergencies. Multiple credit cards mean multiple chances of falling into debt. To stop credit card offers from showing up in your mailbox, call 1 (888) 5OPT-OUT or (888) 567-8688.
• Reduce your credit card debt by paying more than the minimum monthly amount. For example, consider what happens on a $2,000 credit card balance if you pay more than the minimum amount each month:

• Consider getting credit disability insurance on your credit card. This insurance makes the minimum payment on your balance if you become disabled. There could be a pre-existing condition exclusion clause on this card feature. The charge for this benefit is based on the average balance each month.
• Keep your credit card limit low, preferably around $1,000 or $2,000. A low limit will help keep you from falling too deeply into debt. If the credit card company raises your limit, you can always call the company and have the limit lowered again.
• Consider bankruptcy only as a last resort. Bankruptcy will stay on your credit history for many years--seven or 10. This will make getting new credit very difficult. It's better to try to work out a repayment plan with creditors. If you feel you have no other choice than to declare bankruptcy, first talk with a lawyer, the financial counseling personnel on your base or post, or a legal aid clinic.