Break the Cycle of Debt and Rebuild Your Finances, Part 2

Stacy Livingstone-Hoyte, AFC®, is an experienced Financial Counselor who has worked extensively with U.S. Armed Forces members and families. She is a long-time volunteer blogger for and previously served at the Fleet and Family Support Center, Millington, Tenn. as a financial counselor. Prior to government service, she worked as a financial services representative for several brokerage and insurance firms. As a military spouse, Ms. Livingstone-Hoyte knows firsthand of the financial challenges and opportunities that face military families across the globe. To that end, she embraces a steadfast belief that financial success can be simple, just not easy.

While Part 1 of this two-part series discussed ways to increase awareness of your spending habits and tips to be better stewards of your money in the present and future, Part 2 will focus on tips and resources to resolve past debts.

Anyone burdened with debt is likely to hear the terms debt management plan, debt2debt settlement and debt consolidation. While each option provides unique advantages, there could be hidden fees and disadvantages, so you should always consider the assistance of a non-profit credit counselor or military financial counselor who will help you navigate the maze of alternatives.

Debt Management Plans. Through the assistance of a third-party, such as a non-profit credit counseling agency, a debt management plan utilizes a monthly structured payoff that creditors you owe have already accepted. As part of the terms of a debt management plan, the accounts included are closed, interest rates are usually reduced, your credit ratings are typically preserved, and most importantly, you can avoid bankruptcy.

Debt Settlement Plans. Unlike debt management plans, debt settlement plans involve a final, reduced payoff amount from each creditor that has been negotiated on your behalf by either yourself or a third party, such as a non-profit credit counseling agency. Although the amount you are required to pay back is reduced, a serious tradeoff of a debt settlement plan is how it will affect your credit report, as creditors are required to note such accounts as “settled” versus “paid in full.” What this means for you is that when you apply for credit in the future, whether it’s a vehicle, credit card or mortgage, the company that pulls your credit report will see that you were unable to satisfy a debt obligation. In addition, when you file your annual taxes, you may owe taxes on settled debt amount.

Debt Consolidation. Debt consolidation refers to obtaining one loan to pay off the existing balance of your collective debts. One advantage of this is that you make one single payment each month to one creditor; however, one disadvantage is that the interest rates can be higher than your existing creditors. As with debt management plans and debt settlement plans, it is always best to consult a non-profit credit counseling agency to determine if this is the best option for you.

Debt management can be extremely stressful, but having a solid financial plan will reduce this burden and set you up for greater financial successes in your future. For assistance locating a non-profit credit counselor, visit or visit your local Fleet and Family Support Center.

2 responses to “Break the Cycle of Debt and Rebuild Your Finances, Part 2

  1. It is stressfull face debst managment, if, the more, one had not liquid disponibility on a certain moment, if other debits are to be planned, if introits, due to low import, are not commisurated to life necessity, including only the indispensable for life, do not consent to make so, the stress raise. Healh problems that become chronic, inaspected situations may put a subject on the situation to not be able to rationalise for, and this not for he is not a rasonable person. The stress then raisemore and also if one would mantain retionality, this is not possible, not completely. The economic crisis and the restrictions on financial aid,, worse the situation. That is on civil and on military family. On military life it seem impossible interact, one known not what make, not easy, is afraid of eventual consequences. he nust refer immediiately to financial cosuelor, represent the problem, examine together how solve it and find the resource for. Another manner, to be made together, is find aid on buddies, most of whom may ave the same problems. Be aware, buddies, notis impossible and, newly find the serenity, all horizons are more light claudio alpaca

  2. Make an effective debt management plan and follow it can help to reduce or solve your debts. Debt Consolidation is also one of the best option for eliminating debts. Taking an advice of debt resolution experts can be worth to find out right solution for your debts.

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