By attorney Howard Iken, Special to THELAW.TV
The last five years were financially rough for many people. Quite a few lost their houses in the real estate bust. Many others lost their jobs from corporate downsizing, recessionary pressure, and government spending cutbacks. A smaller number of people were simply forced into insolvency by the decision of credit grantors to cut back their credit line flexibility, and drastically raise interest rates on existing credit lines. Finally, more people than ever before have been financially "stressed" by adult children looking for financial help. No matter which issue or effect hit you, the last five years were the most economically challenging of any time in decades.
But there is hope on the horizon. According to a consumer sentiment index maintained by Thomson Reuters/University of Michigan, December is at a six month high in consumer confidence. Stock market indexes have reached record highs. The real estate market is on its way to a healthy mix of values, buyer demand, and available inventory. Builders have once again started constructing homes. And the last of the huge government bailouts ended with the sell off of government owned stock in General Motors. Add in a predicted uptick in retail sales this holiday season and you get a great recipe for success in 2014.
So what can you do with residual debt from the "down times" of the last five years? Follow this tactical guide to debt in the new year and increase your chances of a happy 2014:
Mortgage refinance, short sales, and deed in lieu of foreclosure
A house that is significantly upside down in value is an anchor around your neck that will never go away. Lose that attachment to your house and make arrangements to either refinance -- or to get rid of it. If foreclosure in inevitable, you may want to check how bankruptcy can shield you from foreclosure consequences. You should also look into the federal HAMP program to figure out loan modification options. Start the process now and your new year will be that much more stress free.
Get or modify child support
It is really amazing how many people struggle with debt, but do not seek help with child support from the other parent. If you are a single parent and are not getting help, start the process now. There are child support enforcement agencies in most states that establish child support for free. For those who can afford it, a private child support attorney is best. Be sure to look at this free child support calculator to see money you are missing out on.
Ignore zombie debt
This is the debt left over when a primary creditor writes off a bad debt, and sells the rights to collect the debt to another company. The various names of debt buyers are endless, but they all have one thing in common: a desire to get money from you at any cost. There is no getting rid of zombie debt, unless you decide to file for bankruptcy. But it is not a crime to owe money or to ignore debt collectors. Change your phone number for the new year and ignore all communications from debt collectors. You will find it much more comfortable to live with zombie debt if the collects do not have a direct in to your cell phone.
Cut back on your lifestyle and tackle your debts
It may be time to get back to basics. We all remember a time in life when we had no money and experienced the happiness that comes with not being under pressure. Do you really need that upscale car? Will cooking at home be the end of your world? You can immediately lower stress and get a handle on your finances by severely cutting back on spending in 2014. Start now and you will experience the peace of mind that comes with moving forward in a positive direction.
File for bankruptcy
The big gun of tactical debt control, bankruptcy can cure many issues including medical bills, defaulted credit cards, and upside down mortgages. If you have significant debt issues and qualify for bankruptcy, then go get a consultation now. A Chapter 7 bankruptcy begins and ends quickly, and can make many problems a distant memory.
Set goals and tasks -- make a visual chart
Whatever your path to financial relief in the new year, be sure put it on paper. Nothing provides as potent a reminder as a progress chart hung prominently in a place you look at daily -- such as the refrigerator door. You can measure your debt, show your progress, or list your steps taken to achieve peace of mind. Put it in a spot you face every day and you are sure to make significant progress.
No everyone is the same in their financial situation -- or their desire to change. But it is important to move forward to ease the financial woes of the last five years. No matter which technique you use, now is the time to get on top of finances, enjoy the improved economy, and have a great new year.