Friday focus: Personal finance

The holidays are over, but for many consumers, the headaches are just beginning as the bills pile up.

Tackle them now, because many experts say 2009 will be a tough year, especially for those who are debt-laden.

A couple of options for those deep in debt:

•Do it yourself: Total up all your debts. Create a summary sheet that lists the creditor, monthly payment, balance, interest rate and credit limit for each. List the status of each account, whether any bills are past due, and verify the payment due dates.

If you can’t pay all of your monthly bills, first pay the bills that are necessary for health, shelter, food and basic transportation. Then pay the secured debts such as your car loan.

Payments on unsecured loans, such as most credit cards, should come last.

Contact your creditors to try to negotiate lower rates.

If you’re in danger of missing a payment, contact your creditors before you fall behind. Your card issuer may be able to work out a payment plan, lower your rate or lower your monthly payment.

•Get help: Another option is to seek professional credit counseling. Reputable credit counseling organizations employ people who are trained and certified in budgeting and debt management.

Part of credit counseling may include a debt management plan, or DMP. In a DMP, you deposit money each month with a credit counseling organization. The organization uses these deposits to pay your debts according to a payment schedule it has worked out with you and your creditors.

“In a DMP, you pay 100 percent of the principal,” said Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. “The plan is to help you pay off your debt in full.”

His agency charges a one-time setup fee of $30, with monthly fees ranging from $12 to $24, “depending on the number of creditors we’d be sending money to.”

Get a detailed price quote in writing, and ask specifically whether all fees are covered. If you can’t afford the fees, ask if the credit counseling firm will waive or reduce them.

Look for an organization that offers a range of services, and counselors who are trained and certified, advises the Federal Trade Commission.

Dallas Morning News