Typically, there are two parts to the debtor education class, one part you take prior to filing for bankruptcy, the second part you take after your filing, but must be completed prior to any debt being discharged (if filing a Chapter 7).   I am going to cover the first part, as it will offer you great information on how you may be able to take charge of your finances, debt and financial future on your own, and you can take swift and immediate action with this information and advice.

The first part of this debtor education class is considered a credit counseling course.  In this course, you walk through your finances in great detail, completing exercises in which you tally up your income, expenses, calculate your net worth and, of course, list your creditors including total balance and monthly payment.  You end up with your debt to income ratio, which ideally should be about 15-20%.   You also get a budget breakdown and tips to reduce your expenses. 

This can be a very eye-opening exercise, and one that you can do very quickly yourself.    The true trick to this?  BE HONEST.  All too many of us have an “idea” of our budget, but do you know where every single dollar that you earn goes?  Only with a firm understanding of your finances can you create a budget today, with your loved ones, that might get you on the right track before it is too late.  At the dinner table tonight, bring a pad of paper.  The topic of the evening should be “10 Things I Will Do to Save Money”.  Everyone should commit to what they can do, whether it is cutting out daily coffee runs (those add up!) to taking shorter showers (saving water is good thing, too!) and more.

Furthermore, you are asked to contemplate your financial goals.  Even when one is in debt, feeling overwhelmed and completely confused, you have to be able to step back, take a deep breath and look for the light at the end of the tunnel.  You should have short term, mid term and long term goals.  Short term financial goals could include taking your highest interest rate credit card and paying it off first.  A mid term goal could be to pay off your car.  Finally, a long term goal could be to pay off your mortgage, or save for a child’s college education. 

Again, this can be an exercise to do with your family, as a family unit to get everyone on the same track.   It can be uncomfortable to discuss finances with your family, especially children.  But the sooner that they learn how to budget and create financial goals of their own, the better off they will be once they are on their own and making critical decisions.  Don’t allow your children to one day get trapped by debt.  Teach them now, and give them goals to succeed.

You will receive information on all of your options on how you can best handle your debt, your finances, and your budget.  Some options are easier than others, but they all have one common thread:  to fix your debt situation, you will have to work really hard.  It probably took you years to get into debt, it may take you years to get out of it as well.  But if you have a plan that you visit every day, you stay committed to the plan, your family is partners in this plan and you make it your unwavering goal to see your option to its successful end, you will find yourself out of debt.

Handle the debt on your own:  You can try to handle the debt on your own, by borrowing from friend and family to try to get your debt paid off.  You can try to negotiate with your creditors on your own.  Many consumers find it to be incredibly frustrating, and not always successful. However, the squeaky wheel gets the grease, and you may find that by being professional and persistent, you may get your interest rate lowered, even your monthly minimum payments lowered so you can try to stay on track. 

You could try to obtain a debt consolidation settlement.  Get Credit Card Debt Help. and live more with less debt. You could borrow money from friends and family, even try to negotiate on your own with all of your creditors. 

Borrow against or sell your valuables and assets:  You could try to obtain a debt consolidation loan, refinanceyour home, even liquidate your assets on your own.  Many consumers have used sites such as Ebay or Craig’s List to sell valuable items that they may no longer even be using and applying that cash toward their debt.   I have seen many garage and “estate” sales in my area, and personally know people that have done this with the purpose of paying off their debt…some, raising thousands of dollars toward that end!

Debt management plan:  If you work with a debt management agency, first of all, make sure that they are a legitimate organization.  All too many unscrupulous characters have crawled out from under their rocks to prey on consumers who are scared, worried, and confused.   This may help you pay all of your bills off much faster than you could do on your own.  Basically, you will have an agency that helps you negotiate with your creditors, knock down the interest rates, and you pay ONE payment each month, paying off your debt usually within 5 years.

Bankruptcy:  Of course, the last resort is filing for personal bankruptcy, and deciding between Chapter 7 (in which your debts are discharged) or Chapter 13 (in which you work out a repayment plan). Click here if you need a Bankruptcy Lawyer as you should make this decision with the advice of a bankruptcy attorney in your area.  Ask A Lawyer Online Now.
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You will also get information on your rights as a consumer, as creditors cannot harass you, nor threaten you.   For example, did you know about the Fair Debt Collection Practices Act?  This law prohibits your creditors from calling you before 8 am or after 9 pm.  Creditors also cannot use foul language with you or threaten you in any way.   If creditors are harassing you, you can end it by telling them on the phone, “Pursuant to the Fair Debt Collection Practices Act…” and end that statement telling them that they cannot treat you in the the specific ways in which they are harassing you. 

Furthermore, you have the right to review one free credit report each year, as well as dispute items that are not accurate on your credit report. Use Your Rights! Repair Your Credit Today! Let LexingtonLaw.com Help!  You also have the right to dispute any issues on your credit card statements directly with your creditors as well.

You will receive detailed information about credit.  For example, what is the true cost of credit?  If you charge something, what does it really cost you by the time that you pay it off?  How can you improve your credit score?  How can you reestablish your credit?  Do you even know your current credit score?  Get involved, as knowledge is power when it comes to your credit!   Credit Crisis Concerns? Get 20% off FICO credit scores now. 

At the end of this type of course, you should truly be far more knowledgeable about credit, how to deal with your debt, how to create a budget, and how to be a better, more savvy credit consumer.  Many of us need credit, however, all too many of us use credit not for what we NEED, but for what we WANT.   

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The ability to transfer high-interest credit card balances can help to make payments much more manageable. Not to mention, this strategy is paramount, for some, in their get out of debt plans programs and plans already in place.
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If you have more questions about debt consolidation, you can ask a financial planning professional or even a trusted banker for more information and to get help to weigh all of your options. 

Debt consolidation is a solution that many people jump at. But it may not be the best answer for you. Read this article to find the three common mistakes people make when contemplating debt consolidation and management
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If you have more questions, or are concerned with your credit card debt, consult with a financial planning professional or a credit counselor for more information.  It is possible to avoid bankruptcy through sound credit counseling and debt management.

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