Consumer Watch: Dealing with overwhelming debt
OKLAHOMA CITY (KOKH) —
Poor money management skills are a big reason people get into overwhelming debt, but sometimes debt has little to do with money management and more to do with unforeseen circumstances, like health problems.
According to the CDC, more than one in four families are dealing with the financial burden of medical care costs. This and other types of financial distress can leave a person feeling like there are no options.
There are three types of debt that are distressing many Americans. Experts tell Fox 25 Consumer Watch they all must be dealt with the same way-- head on.
the three types of debt that get Americans into the most financial problems are.
1.General credit card debt
2. Medical expenses
3. Student debt
This last one is becoming more of a problem as the cost of higher education increases.
Whatever caused the debt can be different-- from bad money management, lack of saving, and even life changes.
If you are currently healthy and facing no major financial hardships right now, Melinda Warren, co-president of Hughes Warren Inc., says starting a savings plan can save you future problems.
“Having a plan is always a good idea. The main thing is to follow the plan. First set it up, follow it, adjust it as you go,” says Warren.
If you are already suffering from a distressing amount of debt, here are Warren's recommendations.
1. Accept your situation
2. Take inventory- figure out your income, what your expenses are, add up the debt
3. Define your goals - how long will the payoff take.
Bankruptcy is not always the best answer.
“Many times the debt is not that large, and it is really not worth the time or the effort or the money to go through a bankruptcy, so each individual situation is different, I think that most people, if they wanted to badly enough, could pay off their debt. and avoid bankruptcy,” says Warren.
If your main debt issue is student debt, Federal Student Loans cannot remove through bankruptcy.
Warren says it will be very important not to get discouraged, and to be ready to alter your plan if something changes in your life.