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You can determine a financial emergency once you

experience a situation that can render you moneyless,

homeless or without any important property. You should

differentiate this kind of emergency from a

threatening phone call or letter from a bill

collector.

When experiencing such emergency, it is crucial to act

immediately and begin by contacting the creditor.

Doing so enables you to work out a temporary solution,

which can help you keep your properties. However, it

does not always work and if so, getting in touch with

your lawyer to negotiate with the creditor is helpful.

Face the Problem

The common misconception in debt problems is “the less

you know, the less it hurts”. However, you must learn

how to face your debt problems. You must be able to do

this since rebuilding and repairing the credit will

not take place when you do not know exactly where your

money goes or where it must go instead.

Although it is not harmful to overestimate your debt,

it is always beneficial to know how much money you

really owe. You can do this by taking a look on the

bills you have received. In case you have thrown out

your bills without even opening them, you can still

call customer service and inquire about the bills.

There are several creditors that use automated

telephone systems. This can provide a balance and

information regarding the payments automatically.

Additionally, information about your account might

also be available on your creditors’ Web sites. After

acquiring the necessary details, sum it all up,

especially those past due installment bills and your

monthly obligations.

Options Available for Your Debts

There are several options available when dealing with

debts. One is to do nothing. This option is probably

the most popular approach used by those who are deeply

in debt. Most often, these people have very small

income and property and do not normally expect any

change in their lifestyle. If you do not anticipate

any steady income any time soon, you can consider this

option.

However, if doing nothing does not help, you can find

money to pay your debts. You can do this by, first,

selling a major asset, like a car or a house. This can

be a good choice if you can no longer afford your car

or house payments. Instead of waiting for a

repossession or foreclosure to happen, selling a

property is always a better.

The proceeds you gain from the sales can help lessen

your debt and enable you to pay off anything you still

owe. More so, you should remember to pay off the liens

placed by the creditors and use anything that is left

to aid you in paying your other debts. However, before

taking this step, make sure that you already came up

with an alternative for your housing or transportation

needs.

Another way, which can help you pay off your debts, is

to cut your expenses. Not only will this eventually

aid you in the payment but also in negotiating with

your creditors. Try to shrink the cost of your food by

clipping coupons, purchasing generic brands, buying

when there is a sale or shopping at outlets with

discounts.

Yet, if you cannot seem to cut your expenses, you can

always borrow money from a tax-deferred account.

Tax-deferred retirement account, like IRA or 401(k),

can help pay off debts by withdrawing money from them

before retirement. However, since you may need to pay

a penalty or taxes, this should only serve as your

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