Pin It
Favorite

Digging Yourself Out 

by Cara Gardner


So you've got debt. And it's growing. You're only paying the minimums. You're living paycheck to paycheck, with no money left over. And creditors are calling you. If any one of these things is happening, the experts say you need a little help -- or a lot, depending on just how bad it's gotten.


"When an individual finds [him/herself] in financial trouble, the best thing they can do is contact their lenders," says Gene Fitzpatrick, vice president of lending with Spokane's Numerica Credit Union. Fitzpatrick has about seven people on staff just to talk to people about their financial situations. He's in the business of getting loaned money returned, so he knows all the short cuts people try that don't work -- and the ones that do. Of all the things a consumer can do wrong, like miss a payment, rack up more debt, go through predatory lenders, Fitzpatrick says by far the worst mistake is to avoid your creditors with the hope that it will all go away.


"If you make the first step in talking to your creditor, you've bought yourself a lot of good will. Call them up, say, 'This is where I'm at, here's my position,' offer them something. Talk about realistic time frames." Fitzpatrick says by approaching it from an amicable position, creditors will be much easier to deal with.


"You have to remember, if the creditor has called you, you're probably more than 15 days down and all lenders send you notices. If the individual has not called and explained, they've already started to dig themselves a hole."


Creditors are most likely to be successful with collections in the first 30-45 days of delinquency, and they know this, so each of them will be working hard during that time to work with you on a plan. That's the quick fix -- the band-aid that helps out in an emergency situation. But most people with high credit card balances, whether due to improper budgeting and spending sprees, unemployment or medical emergencies, need long term solutions. That's when they're faced with the ever-expanding pool of debt-management agencies -- a pool where they'll be swimming with sharks.


There are about 3 million active debt management plans nationwide. Each year, thousands of debt-laden people get their finances under control with the help of these agencies, but many also find themselves taken advantage of and left with fees for the services on top of what they already owed. Fitzpatrick says people should look carefully into several agencies in their area before choosing one to help them manage their debt. There are some red flags to watch for:


4 How much an agency advertises: "If they are constantly advertising and they say it's 'free' for you, who's paying for their advertising?"


4 The agency promises one low, monthly payment: "That's only possible if you own real estate. But [if you have] a $2,000 balance at 18 percent interest, it's not a good deal to have them extend you on a plan for 15 years."


4 Fees: "Look at what fee they'll charge. If they're not charging a fee, ask them how they're getting paid." Often, legitimate credit counseling services are paid "fair shares," or commissions from the credit card companies for helping consumers repay their debt.


All debt-management agencies work a little differently. Some will charge you fees up front, while others will hold your first monthly payments for themselves. It's best to have several debt-management plans to choose from, and if you have a bank account, to speak with a representative from your bank about what may work best for you.





Publication date: 09/16/04
  • Pin It

Latest in Comment

  • Women's Movement
  • Women's Movement

    The Zags are thrilling their fans and filling the stands in a way few women's programs are anywhere
    • Dec 17, 2014
  • Cultural Warrior
  • Cultural Warrior

    Publisher's Note
    • Dec 17, 2014
  • Sorry, Senator Risch
  • Sorry, Senator Risch

    But transparency isn't the problem with torture
    • Dec 17, 2014
  • More »

Comments

Subscribe to this thread:

Add a comment

Today | Sat | Sun | Mon | Tue | Wed | Thu
Campbell House Holidays

Campbell House Holidays @ Northwest Museum of Arts & Culture

Wednesdays-Sundays. Continues through Jan. 4

All of today's events | Staff Picks

More by Cara Gardner

  • Pride or Prejudice?

    Jim West may have overcompensated for his closeted sexual identity by voting against gay rights legislation. But how are his fellow Republicans dealing with the news that the powerful conservative has admitted to sexual relationships with
    • Jul 8, 2005
  • Weapon of Mass Doubt

    Scott Ritter has been called "an honest man lost in Washington" by Forbes and "the most famous renegade Marine officer" by the New York Times. A former marine captain and the former chief weapons inspector for Unscom, the agency in charge
    • Jun 23, 2005
  • Plaintiffs Speak

    For many, the current hearings in the Washington Supreme Court regarding marriage equality are interesting side notes in the ongoing battle over the right of homosexuals to marry legally. But for Marge Ballack and Diane Lantz, two plaintif
    • Jun 23, 2005
  • More »

Most Commented On

  • Let Us Breathe

    Spokane joins national protests over the failure to indict white officers for killing black civilians
    • Dec 10, 2014
  • Screw Big Cities

    A mid-sized manifesto
    • Dec 3, 2014
  • More »

© 2014 Inlander
Website powered by Foundation