Five Steps To Debt Recovery

debt recovery

I Have No Idea How Much Money I Owe.” That was the response of 20% of MoneyProblems.ca visitors who took our money poll about assessing your debt. In fact, only 40% of respondents said they kept track of their debt. And the remaining 40% thought they knew how much debt they had but weren’t sure.

But it is possible the person who didn’t have a clue as to how much debt they were carrying may be better off that the person who thought they knew. At least they are being honest with themselves. Admitting that you have a debt problem is the first step to debt recovery. Now you can begin to work on a plan towards finding a solution.

Here are five steps that can keep you motivated to build your debt recovery plan:

1) Define The Problem

You’ve admitted you don’t know how much money you owe. Begin by assessing your debt. Make a list of everyone you owe money to and how much. If you don’t know where to start, get a copy of your credit report.

2) Claim The Problem

Don’t continue to deny that you have a debt problem. Debts don’t go away on their own. By taking ownership you can begin the process of developing a plan to eliminate your debts. If you’re afraid to open the mail it’s time to act. Don’t ignore your debts because of a lack of confidence. You can make a lifelong difference in your financial security by becoming debt free.

3) Identify Your Danger Zones

While your objective may be to eliminate your debts, the first positive change you can make is to stop making the problem worse. Debt typically accumulates over time and can be caused by many factors – divorce, emotional spending, income reduction or illness. If you have problems with impulse shopping, you need to avoid the opportunities to indulge. That may mean leaving your credit cards at home or not visiting your favourite stores. You have to get rid of old, unhealthy habits, and substitute new, more financially secure, habits.

4) Build A Plan

It’s not enough to want to be out of debt. The only way to be successful is to have a well crafted plan to get you to where you want to be. The way to do that is to create a personal budget.

5) Get Some Support

If you think you are able to eliminate your debt on your own, the best way to stay on track is to be accountable to someone. Get your whole family involved in the process. Work as a team and keep each other motivated to stay on course with your debt recovery.

Don’t let the sheer magnitude of your debts put you off. If you don’t think you can cope with your debts on your own, get some professional help. This may mean talking to a credit counsellor about your budget or talking to a bankruptcy trustee about your debt relief options. Either way, admitting you have a debt problem and asking for help is a sign of progress.

If you need help achieving your debt recovery goals, contact a debt advisor today. We can help by taking a fresh look at your situation and helping you begin on the road to your debt recovery.

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