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Credit Debt: The Three Steps of Debt

By: Michael Millington

Having credit debt is a fairly common issue in this day and age. However, due to its frequency, many people don’t know how influential this sort of debt can be. Credit debt can be harmless to those who know how to deal with it. To others, the same debt can be a crippling situation with only a few methods of solution. Here we will discuss credit debt, it’s potential impact on your life and how to stop it before it grows out of hand.

The Three Stages of Credit Debt

The Beginning

Debt never starts out as a huge problem. In the beginning, debt is manageable as it is fresh to both the lender and debtor. It is in this form that most people underestimate credit debt. Because it doesn’t come with immediate action against negligence, people tend to prioritize it less. It’s only when they feel the consequences of their actions that people tend to act.

The best way to attack credit debt in the early stages is to list your financial obligations and begin to prioritize paying each one off. Knowing the importance of paying off your debts before they become a problem is imperative. This can help to stabilize your finances, giving you better options for credit choices, lending options and big ticket purchases.

The Warning

Once missing your debt payments becomes a situation, you’ll need to head it off to halt further negative ramifications. At this point, credit providers may have already assessed late fees or interest charges. While this may be enough to cause some people to act on their delinquent accounts, others still might not be moved to do anything.

Should you find yourself in this position, consider reaching out to your lenders for help/advice on paying off the debt you have. One thing to keep in mind is that lenders want you to pay off your debts with them. Due to this, they may be more helpful than you may imagine them to be. This can be daunting when you owe the people you need to talk to.

The Credit Debt Hole

The last part of this equation comes well after the point of no return. Should your debt grow beyond your ability to handle, you may want to reach out to third party professionals at this point. When your debts grow three and four months late, lenders begin to take serious action against you. This can result in debt collectors, legal action or other collection actions.

Credit debt, at the point of no return, can still be handled. However, the options you might be left with could be as damaging as the debt itself. No matter how deep the hole, there is always a way out. Consider a debt settlement company for your debt needs or, if you’re in more dire of a situation, bankruptcy might be your only option. Just be sure to do the proper research on your available options.