Insomnia

When you are buried under debt till nose, getting sleep at night will be a regular problem. You may get doze off after gulping down few sleeping pills. But don’t be surprised if you get up sooner than usual, and feel dizzy entire day.

However, once you start repaying your debt, or build an emergency fund, you will start having healthy sleep at nights.

Statistics: More than 40% Americans with debt have sleep issues.

Headaches

The only time I get headache is either when I give up caffeine, or am under debt. And this is the case with most Americans. More than 44% face migraine or other headache-related problems due to debt.

Anxiety

Whenever your phone rings, even if it’s from your close relative, your heart rate simply skyrockets at first. When you hear about an imminent expense, you go numb, even if it’s buying Christmas gift for loved ones.

You can handle this anxiety by exercising, reading books, spending time with your loved ones, and so on. But you will constantly feel burden on your neck and in your heart. More than 29% of debt ridden population feels severe anxiety throughout the day.

Heart Attack

If you experience constant stress and anxiety, you are more likely to have a heart attack. Actually, people with debt burden are twice more likely to get a heart attack than those without it.

Ulcers

Stress causes many health problems, and one of them is ulcers. More than 27% with debt stress have digestive problems, which eventually causes ulcers. And only 8% of people without stress get ulcers.

Back Pain

Getting a back pain while sleeping on an uncomfortable mattress is a different issue. But, many go through a severe pain due to stress caused by debts, which leads to muscle tension, back pain, and other injuries.

Ouch. Debt hurts so much.

It is because debt is now a socially acceptable term. Getting a credit card is very convenient, and loans are available quickly. Besides, spending is fun, even if we don’t earn enough to repay credit card loan.

Most people don’t like the idea of getting out of debt or taking the pains to reduce it. However, we have to eventually do it, when we are buried under debt till our nose, and every phone call we receive is from some or the other bank.

However, times our tough, and it’s becoming increasingly difficult to manage our expenses. Many of us don’t even have jobs. If you are a bit concerned about your loan repayment, and credit score, here are few debt management tips that you would love.

1.    Write it Down

until you don’t have things in writing, the idea is still vague. Get a journal, write down how much you owe, and think about ways you can repay it. Seeing it every time in front of you will motivate you to repay.

2.    Focus on Quick Repayment

Even if it means delaying the purchase of your new car for a year or two. The experience of being debt free is simply enjoyable. Why do you want to delay it? Get started today. Keep saving and repaying.

3.    Earn More

It’s not really necessary to watch TV every evening for four hours. Instead, you can take up a part-time job, earn extra dollars and repay your debt. If jobs aren’t available, try to have a home based business.

4.    Throw Away Your Cards

A better option is to cut it into tiny pieces. Apart from having the freedom of swiping it everywhere and buying few things, most cards are nothing but debt generators. Most of our debt comprises of mortgage and credit card payment. We can’t do much about mortgages, but credit cards can be thrown right away.

5.    Constant Motivation

After reading around 20 debt reduction articles in a day, you would be all charged up to repay your debt. But as soon as you realize it’s not as simple as reading articles, your energies would shrink. Have constant motivation by talking about it to your spouse, reading things regularly, consulting a debt expert, and so on.

6.    Take Charge

You can either sit back and keep taking creditors’ calls, or you can stand up and start repaying them one by one. The choice you make would determine your financial condition in future. It’s your money, stop complaining, take charge of it.

7.    Realize the Problem

Credit card, initially when you take it, is a boon. However, no provider will keep lending you till the end of your life, not even your family would do that. Borrowing is always a problem. If you are not able to repay it, you can lose all your assets including your house.

8.    Interest Can Make Your Life Hell

If you don’t pay your debt for a longer time, interest you owe on your debt can exceed the debt amount. Compound interest is good if you are an investor, but it’s worse when you owe money. It can literally make your life hell.

9.    Manage Small Expenses

Spending few bucks, say going out for a movie, wouldn’t make you poor. But if you look at the big picture, we are talking about thousands and thousands of dollars. Eating out with your family once a week, and having a $5 latte every day can really be a big expense.

10.    Pay More Than Minimum Payments

By making minimum payments every month, you simply let card providers earn ut of your misery. This option may be convenient for you, but companies earn a lot from you on interest. In long term, you are the one who loses.

11.    You Don’t Have to Keep Up With The Jones

Let you neighbor buy a new car or go out for dinner every night. You don’t have to do it. What would you prefer? A miserable retirement or a comfortable one?

12.    Negotiate

Call up all your debtors and ask for settlement. Tell them you sincerely wouldn’t be able to pay the full amount. But instead of filing for bankruptcy and giving nothing, you are trying to repay debt slowly. Ask them to waive of some charges or some part of your debt.

13.    Trim your Bills

Cutting down bills, though not easy, is much effective. If you aren’t able to find a part-time job to repay your debts, it’s not an end. You can cut down your expenses considerably, and repay your loans gradually.

14.    Sell Useless Things

If you have accumulated debt by buying stuffs through credit card, I am sure you must have bought many items that now lay unused and useless. Instead of throwing them away or giving it away as charity, you can sell them on eBay or through garage sale.

If you are astonished at the amount of debt she owes, you will be stupefied to learn that this is only a part of total debt she actually has to repay. Five US construction companies have recently filed lien against her as she owes a huge debt borrowed to make changes in her home. Biggest debt among the five is approximately $674,000. This money was used to purchase labor and materials to modify her existing house, construct huge swimming pool, and build expensive flooring for her guest rooms.

Being unable to manage her debt, she has hired Robert T. Leonard, a tax attorney, to handle further proceedings, who refuses to reveal any information about her Pamela Anderson debt.

Recently, on Twitter, she informed her fans that she’s quite embarrassed by the situation as owing debt is one of the worst things she would like to have. Accepting the current situation, she has taken full responsibility of her debt and said she would try every possible thing to repay it. She has also participated in Dance with the Stars, which would help her a bit to reduce her loans.

Though introduction of her new fragrance, Malibu, is quite an acceptable thing to do, making out is definitely not a debt reduction strategy. Recently, while playing poker, she was down by 250 thousand dollars, and didn’t have enough cash to repay it. The other gentlemen, however, thought she had something more valuable than cash. Hence, he offered to settle her gambling debt, if she would agree to make out with him. Not surprisingly, she agreed and it was all settled.

Pamela Anderson debt, however, is too big to be settled by making out. And it is definitely not one of the best debt reduction strategies. There are many other ways to get rid of one’s debt like debt settlement companies, debt management companies, debt consolidation loans, negotiation, etc.

With numerous reputed debt settlement companies in the country today, reducing your debt isn’t an impossible task. They negotiate with creditors and manage to waive off around 50% of your debt, without actually making out with any one of them.

Hence, if you think yours is similar to Pamela Anderson debt story, don’t wait for it to mount further. Seek proper advice and attack your debt.

Debt Relief Options :

Debt Consolidation- A debt consolidation program can help you to avail lower interest rates on your existing loan. This way the amount of your monthly loan payments also fall. A debt consolidation company can also help you in eliminating the late fees charged to your debt account. If you have piled up credit card debt, then you should opt for Credit Card debt Consolidation program in order to get debt Relief. If you have defaulted in paying your utility bills and medical bills, then also you can go for Bill Consolidation.

Debt Management-If you enroll for a debt Management Program, then the Credit Counseling Agency starts negotiating with your creditors in order to give you debt Relief. Most of the times, the counseling agency becomes able to reduce the interest rates on your loans. A debt Management Program can also waive off the late payment fees.

Debt Settlement-Through a debt Settlement Program, you can reduce your total loan balance by 40% to 60%. So, there is no doubt that debt Settlement is a very viable option of debt Relief. The debt settlement company negotiates with the creditors in order to reduce the over-limit charges and the late fees. Moreover, you can make one single monthly payment to the debt settlement company and it distributes the money among your creditors.

Self Repayment Plan-If you want to manage your debt situation on your own in order to get debt Relief, then you should proceed with a Self Repayment Plan. After writing down all your debt account balances you should prioritize them and make a budget plan. Your Self Repayment Plan should be such that you will be able to make your daily expenses along with repaying your debts.

Bankruptcy-If you fail to repay your debts even by opting for a debt consolidation or debt management or debt settlement program, then bankruptcy is the only option left for you. But always try to avoid this option of debt Relief as this can ruin credit history and can make you unable to get any loan in the rest of your life.

• Being trendy:
  No, I am not asking them to walk like a scrub in their colleges. However, they don’t realize how much they spend just to keep up with the trend. Quite similar to the trend, their money fades away, quicker than expected. Instead, they can focus on wearing and buying what’s convenient, rather than what’s in.
• Going out and eating out more than required:
  We all know college students consume alcohol when they say ‘going out’. It’s hardly a secret. Reducing the number of times they go out, however, can save them enough to meet next month’s expenses. But they feel going out is cool. The more you go out, the cooler you are. Personally, I go out once a week (by going out I mean nigh out) and party literally like an animal. However, I know indulging into such activities often will do no good but accumulate huge debt.
• Having an unrealistic lifestyle:
  You know, I would love to have a round of golf everyday. But that’s an unrealistic lifestyle, don’t you think? I have lots of money in my bank account. But I haven’t accumulated it to play golf everyday. The conclusion is: having a hobby or passion to do something is good. But does your bank account permits you to make do it daily. Does it allow you to live an unrealistic life?
• Depending on future income:
  Almost every college student assumes they would earn millions as soon as they graduate. Thousands, if not millions. Hence, they keep spending and accumulating debt based on this assumption. The reality is, however, quite harsh than their lovely dream. You don’t earn until you prepare for it. Yes, your education will help you to seek a good job. But this reason is not enough to overspend.

Hence, it becomes important for them to realize the consequences of these mistakes before it’s too late.

With debt, comes the non-detachable disgrace and the coyness of seeking help. It’s obvious that people seek shelter under the only alternative visible to them. And that’s Bankruptcy. I know you endeavor filing bankruptcy because you did everything you could to get out of debts. However, there are several misconceptions among people about this horrendous solution.

1. Your home would be sold

   People believe that their sweet home would be sold to recover the money that they owe to the creditors. Not if you have filed Chapter 7 or 13 of Bankruptcy. It is an agreement that helps you to retain the house ownership if you regularly repay the monthly mortgage amount without delay. It cannot be seized under any law if you are a persistent payer and have the respective chapters filed.

2. You could lose your job

   Firstly, it’s callously unethical from the employer’s point of view to fire an individual filing for bankruptcy. Secondly, if your boss chooses this unethical path, the law will not permit him to. The Federal Legislation is accountable for the loss incurred by you due to such uneven job loss.

   The employers are permitted to glance at your credit scores but not for performance judgment based on your financial health.

3. Filing Bankruptcy will relieve you from all the debts

   This is the most familiar myth about bankruptcy. Ok, I agree that it help to purge most of your debts but not all. There are many other debts owed by you that are not covered by Chapter 7 or 13. After filing for bankruptcy, you are liable to pay every penny of unpaid federal (or applicable state) taxes, educational loans, and all the debts arising out of fraud.

4. You will not get loans any more

   Alright. You would want to argue with me on this point. How can anyone provide you credit if your credit score is worse than most of the US population? The only way to still receive a loan is by being resilient and patience. Most financial institutions will obviously be reluctant to lend you even a dollar if you have declared bankruptcy. However, their credit policy doesn’t necessarily mention such law. There are chances that you may receive credit if you keep striving. It’s difficult but definitely not impossible.

5. You are left alone

   This is a feeling that most of the people absorb after filing for bankruptcy. However, most of it is caused by your personal behavior. You are quite depressed answering creditor calls, looking at huge bills that cannot be paid, and dealing with rejection of loan applications. But remember, you are not alone. There are financial advisors who not only assist you in your financial lethargy but provide support to recover from the depression.

   These myths will do no good except making you feel further miserable about your condition and will break you morally. Things are possible if you have the nerve to do.

However, you have spent many years with this lack of knowledge and it’s high time that you understand what the real consequences of not repaying the loan are. Didn’t you enjoy spending their money? You did, right? I hope not repaying this loan was as simple as not repaying any mortgages. But it’s not. The only two reasons when the loan provider forgives you is when you die or when you are critically disabled.

Oops! Pretty scary reasons. Aren’t they? Should be. The government is lending you money to study with ease and facilities. You misuse the funds and you say you are scared of these reasons. Although failing to repay student’s loan is not considered as an official crime, the government agencies and loan providers have their methods to get back their funds.

So, what is it that can be done to avoid serious consequences?

1. Consolidation

   When these loans are disbursed to students, the rate of interest generally considered is the prevailing rate during that time. For students, it is usually fixed rate for a longer time. If you borrow from a private lender, rate is high. A government agency charges lower interest rate.Students can acquire these kinds of loans every semester. Hence, you will find several students with number of loans at varying interest rates. Consolidation is nothing but merging all the loans and having a single interest rate. However, a student must request consolidation to each loan provider.

2. Refinancing

   Refinancing means you have to pay lesser amount each month for a longer tenure. Interest rates are generally lower than the previous one. These rates can be negotiated based on how good your credit history is. The lowered interest rate provided by federal agencies varies greatly from the rate by private lenders.

3. Postponement

   Postponement, also known as Deferment, it is generally approved due to various reasons. Under this grant, you can delay the repayment of loan amount for certain period. However, it is granted to students with certain disability undergoing treatment, unemployed for a longer time, or having economic adversity. Generally, no interest is charged when the loan is provided by federal agencies. But, if it is provided by a private lender, the interest keeps on adding to the principal amount, thus resulting in even bigger loan.

4. Forbearance

   Students that are not granted deferment can ask for Forbearance. Here, the repayment of the loan is delayed or decreased with accumulating interest. As forbearance is a grant taken willingly by the defaulter, interest cannot be waived off. Although it gives you a temporary relief from payments, it keeps mounting up the original amount. Forbearance is generally granted after a gap of 12 months.

5. Other Alternatives

   Federal agencies are quite helpful when it comes to difficulty in repayment. Private lenders, on the other hand, are very severe. There are many options like repayment based on your income, settlement amount, repayment varying with income, and many others. If you plan to opt for forbearance and postponement, it’s always wise to talk things out with them in person. If you have a good credit history, you are sure to get a decrement in your repayment amount. If your credit rating seems quite ruined, forget about all the above options.

You don’t want to pay anything? Want to file a bankruptcy?
Don’t even think about it. Along with ruining your credit rating forever, you are also inviting serious perils. Like what?

1. Collections

   I can understand if your lack of knowledge keeps you unaware about financial jargons like subsidized loans and federal loans. Its pretty complex to understand in an hour. But I can surely help you with the meaning of collections. Just miss some payments of your student’s loan and that’s it. The collection agents are everywhere around you.When the lender notices you irregularity of repayment, your case is sent to collections. These are agencies with people expert in collecting money for defaulters. It’s a kind of formal extortion, only they are asking for their own money. They call you and send repeated written notices to you. If you are unable to reply them, they can start contacting your parents as well. If you were a minor when you accepted the loan and your form mentions that your parents would be responsible for non-payment, they can even harass your parents. The costs incurred by them to recollect money from you is also to be paid by you, legally. Wow! An unpaid loan plus collection harassment plus pay for the expenses incurred by them on harassment.

2. Lawsuits

   Generally used by private lenders, in lawsuits, students are taken to court to pay the full unpaid amount without settlement.

3. Ruined Career

   I know you think fooling these agencies is fun and everyone will forget about this over a period of time. Yes, everyone but your credit rating. Now-a-days, almost every company conducts a background check and a credit check even after they have short-listed you for the job. They don’t consider a not-so-good credit rating; you have something much better than that: a defaulter on student’s loan.

4. Increased Interest rates

   You can forget about repayment of your student loan, but the agencies will not. Suddenly, after several months or years you realize that the amount payable now is much higher as the interest rate doubled, charged many times with late fees and penalties. First you were trying to dodge smaller amount and smaller consequences, not face the bigger version.

5. Damaged Credit

   Does it really affect your credit history, if you don’t repay your loan? Here is how I can simply explain. 1 month past due on your loan affects your credit miserably. Just try to calculate the effect of not paying at all. Forget about any good job or admission anywhere for the rest of your life. If you are a minor, rejoice because your co-signer’s credit would be affected equally. You have now ruined others carrier along with yours.

Any more consequences? Yes, Wage Garnishments.

This is probably the most distinguishing consequences of defaulting student’s loan. The lenders are permitted to garnish your hard earned wages, if you fail to repay their loan. To escape this, students find it easy to seek shelter and earn in some other countries. Ok. Pretty good method. First you denied payment, now you started fleeing. However, if you run away from this country, do not dare to step here again as the unpaid balance accumulated because of interest, penalties and sundry fees would be substantially high. Wage garnishment would continue if you come here again.

Still thinking of duping the loan providers? Do it.

Don’t Get Psyched

First of all don’t be embarrassed because you are not alone. Professional debt collectors say that these days there are a large number of middle class and rich people under huge debt. They are first timers and don’t have adequate strategies to cope with the situation. Being first timers they are dismayed and are not focused on the problem. Many are confused or shocked, while others are just sitting over the problem, not really trying to solve it.

Don’t Sit, But Act

Debt collectors might look like starved hounds, ready to pounce on you for pending money, but in reality they are not. The moment you get in to a debt, without delay if you talk to them and workout a payback plan over a given period of time, your life will be very peaceful. The debt collectors will update you with the latest repayment strategies, so that paying back does not become a pain in the neck for you. They help you in prioritizing your assets according to necessity so that you could sell off your non essential assets to clear your loans. When you are in heavy debt you can always think of selling your holiday resort or non-essential luxury recreational vehicle. Can’t you?

Try To Repay All Lenders

It is human tendency to first satiate only those people who make a ruckus! We usually try to first repay only those lenders who hound us for money and take the rest for granted. Don’t take anyone for granted because even those quiet dogs will start barking in no time once they miss their scheduled feed. Give equal priority to all.

Debt Collectors Don’t Seize Properties Generally

Of course, you can think of repayment only after you have enough money to feed your family. Otherwise you cannot think of making any repayment plans. You might be apprehensive that a debt collector might simply seize your properties if you don’t pay back your loan. Debt collectors are not inhuman. They are not going to seize your property if you don’t have money to pay them back. Instead, they are going to work with legal firms and bankruptcy management firms to find solution for your crisis.

Take Outside Help

Non profitable organizations like CCCS offer counseling services and budgeting plans to settle your debts however complicated they may be. But here too you should be cautious because there are many scammers who offer to help you in clearing 80 % of your debts at very low fees.

At the end of the day, don’t be worried about debt. Nowadays there are a lot of options for repayment and debt collectors are humane in their approach.  But this advice is only for circumstantial debtors. Habitual debtors, please excuse because debt for you is only a way to hoard easy money. You really don’t have intentions to payback.

• Even The Rich Get Bankrupt: Though commonly, it’s believed that it’s only the poor who get bankrupt, even the rich might get bankrupt. The recent economical upheaval has brought in a lot of monetary loss for business investors. Many of them have gone bankrupt. The rate of personal bankruptcy this year is seen to be 35 % approximately. Job losses and real estate business slump were seen to be the major reasons for personal bankruptcy in the present times. Also the rate of bankruptcy is expected to rise with the progress in economic recovery.
• Bankruptcy Penalties Are Individualistic: Bankruptcy penalties are individualistic though there are some mandatory payments that you cannot escape if applicable like child support alimony or student loans, in most cases your debt penalties are adjusted according to your convenience and payment capacity. The laws governing bankruptcy differ from state to state and if you are presently in one you should consult a financial expert for that.
• Bankruptcy Does Not Mean That You Lose Out On Everything: You might be of the general opinion that when you go bankrupt, your lenders leave you with nothing. That’s not true always. Many a time if the value of their asset is less than a threshold value or if it’s on a second mortgage the value of the property is less than the equity and as a result bankruptcy happens. In such cases you are allowed to keep the property. The homestead exemption varies from city to city.
• Bankruptcy Is Better Than Postponing Credit Dues: When you have to make a payment on your credit card, if you are bankrupt your credit score will plummet. Declaring that you are bankrupt is better than postponing payments because bankruptcy might remain on your credit reports only for 10 years or so during which period you stand a chance of improving your finances. But in the case of postponement of payment, you might actually accrue a huge amount of money which might be difficult for you to clear in years.
• Debt Settlement Firms Are Not A Very Good Option: Debt settlement firms may promise to settle your debts and size up creditors and to shape up your debt by about 75 % but in reality they don’t do much because they get paid almost every month and they don’t strive to settle your debts soon.
• Don’t Try Early Paybacks: Once you declare your bankruptcy, don’t try to repay your closest relatives or friends, within one year. Also don’t try to sell off your old vehicle for cheap or hide your assets from court. Your bankruptcy protection will be lifted and creditors will hound you more than ever. They can even sue you and get you imprisoned.

Naturally I am strongly motivated to stop him from using any of his credit cards. Like many parents I feel that do students really need to use credit cards?  Well, that might put my apprehensions to rest for sometime but I realize this cannot be a permanent solution. If I restrict my child, he’ll never learn to manage his money efficiently. As an adult he’ll have to use the credit card some day or the other. So, why not put him into the practice of using it properly? For this he should be made to recognize blunders that most of his friends make and learn from them.

Till not so long ago, college students were given 4 credit cards. This was a mistake by the crediting companies as well as parents. These credit cards worked like Aladdin’s jinn for these students. They used them extravagantly for their stylish lifestyles. Most of them were not aware of the consequences of debt and happily kept piling up their debt amounts. The parents and the crediting companies could have done well by identifying their dangerous spending patterns and warned them before of the consequences. Now with the new rules limiting credit pay to students this situation might be rectified.

It’s surprising to know that financial illiteracy is very much prevalent amongst college students of today. They don’t know anything about personal finance, loans, investments, savings and insurance. The government and financial institutions’ efforts to educate children, youngsters and young adults in financial planning and management in the present times is really noteworthy. I hope it makes the youngsters money conscious and helps them in improving their money management skills and maintaining a good credit score.

College students used their student loans to finance their lifestyles and that is utterly shocking! Parents should have noticed this before and warned their children. A lot of problems arise because we give our children more freedom than they deserve. I’m not asking you to curb their freedom, but to make them understand the consequences of what they do.