Create A Budget That Allows Resources For Fun And Addresses Paying Off Debt
A lot of us associate the term living on a budget with only eating the cheapest items we can find at the grocery store and eliminating any expense thats not an absolute necessity. But budgets are meant to create room for things you enjoy, too, and setting a little money aside for those expenses is especially important for anyone who is trying to improve their mental well-being.
Emin Gharibian, a licensed psychologist and founder of Verdugo Psychological Associates, said the first step is to work with your therapist to establish a budget and determine how much you can afford to spend per month on leisure and fun activities, like a weekly meal with friends or other self-care activities, such as taking up a new hobby, in addition to paying down debt. Its unreasonable to tell someone that they cant spend any money for leisure if they have credit card debt, Gharibian said. Its all about budgeting and figuring out what you can afford and sticking to that budget. As long as you have a plan to pay off your debt and are actively working at it, theres no need to punish yourself or swear off every frivolous activity that boosts your mood or allows you to spend quality time with good friends.
If you need more in-depth guidance, Gharibian recommended seeking out a financial planner or accountantbut for basic advice and accountability, the right therapist will suffice.
Balance Transfer Credit Card
If you are on a stable path to paying off your credit card debt, a balance transfer credit card can be a great strategy for paying down debt. A balance transfer card allows you to transfer multiple sources of credit card debt onto one credit card. Ideally, youll take multiple sources of high-interest credit card debt and transfer them to a single credit card with a lower interest rate. Some balance transfer credit cards have 0 percent intro APR offers that can make paying down debt even less expensive.
Does Being On Disability Affect Your Credit
Because your credit report does not list income information, the good news is that receiving disability benefits should not impact your credit score. Its unresolved debts and late or missed payments that can can cause your score to drop. If youre facing a new disability its important to take appropriate steps to deal with your debts as soon as possible. Here are some dos and donts for handling your debts:
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Lockert’s Advice For Others Paying Off Debt
Though Lockert was working and side hustling almost seven days a week just to get by and pay off her loans, she advises others that getting out of debt is not worth burning yourself out over.
“For a lot of things in life, we have to try to enjoy the journey,” she says. “Take care of your mental health because nothing else in your life will work if it’s not intact.”
But Lockert is quick to point out that it’s not just student loan debt that has an impact on your self-esteem. “We attach so much self-worth to people’s income, to their jobs and to their debt as well,” she says.
When it comes to other kinds of debt, like , your mental health can affect the way you spend. People tend to find comfort in buying things, which is how the phrase “retail therapy” came along.
No matter what kind of debt you are battling, Lockert suggests not conflating your self-worth and net worth especially during hard economic times that we are all experiencing today.
“Right now, so many people are unemployed, so many people are in debt, you don’t need to internalize that and let it hurt you,” she says. And keep in mind the exterior forces working against you: inflation goes up while wages stay stagnant, the cost of health care and higher education remain high. “It’s just not an equitable situation for anyone.”
For those burdened with debt, we summarize below three pieces of advice Lockert shared with us.
What Not To Do When Dealing With Debt And Disability
- Dont panic or ignore your debts. Its especially difficult when you have health challenges, but ignoring debts only makes them worse. The late and overage fees start piling up, and the interest rates may skyrocket. If you continue to ignore your debts, youll start to receive calls from collectors, and you may even be sued. Youre far better off facing your debts, no matter how hard that seems.
- Dont keep spending on your card. Every time you use your card, youre promising to repay the amount spent. As soon as you know you will have trouble paying off your cards, you should stop adding to your balances.
- Dont use costly or unscrupulous debt relief companies. You dont need someone to be a go-between for you and your credit card companies. You can talk to your banks yourself, without paying someone else. Avoid companies that tell you to stop making your minimum payments, especially if you dont want your credit history to be trashed.
Disability challenges require many adjustments in your life. Dont let unresolved credit card debt add to your stress at this time. Make a plan to get organized and deal with your debts so you can focus on taking care of your health and your overall well-being.
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How Debt Collectors Contact You
Debt collectors will do things like contacting you by phone, email, and mail reaching out to your employers and reaching out to your family members to try and get your information from them. Luckily, there are limits to what debt collectors can say and ask your employers and others who know you. They can specifically ask for your phone number and address. That said, they are not able to report that they are attempting to collect on a debt. If you hear that a debt collector disclosed to a family member or employer that they are attempting to collect on a debt, you may want to contact an attorney who specializes in debt collections to talk about your rights.
Shady Debt Settlement Agencies
There are a lot of shady agencies ready to prey on people in crisis. Some debt settlement agencies charge money to handle tasks you could have done on your own . Others are outright scams that take your money without working toward reducing your debt. Do your due diligence before signing up with any debt settlement, credit card consolidation or credit repair program: Consult the Better Business Bureau, look for user reviews, and avoid any program that charges fees upfront.
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Yes You Can Be Sued But Will They
Just because you receive disability income doesnt mean you are not able to be sued. That said, it may decrease the likelihood of being sued. Creditors often realize that, because SSDI is protected from garnishment, a legal proceeding may waste their time.
Disability payments are not considered wages, and therefore, they are protected from garnishment. They are also protected from direct access via bank levies. This means that the money you get through your SSDI is completely yours to decide what to do with. Creditors cannot demand or forcibly take any of your SSDI money. Disability also helps protect your general income to a certain extent.
Start Addressing Your Finances
If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditors straight away to put a repayment arrangement in place. See below for tips on talking to your creditors.
If you cant afford to pay anything
You may not be able to afford to pay anything for a little while if you have no income are in temporary housing or are homeless. One option may include negotiating a repayment arrangement where you make no payments for a short time while you get settled.
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Who Will Love Credit Card Debt Forgiveness
The credit report penalties of debt forgiveness will take seven years to expire. Just like any missed payments, charge offs and collection accounts last. In other words, the penalties will expire around the time the rest of the penalties that youve incurred will expire.
If you need a clean break from debt for the lowest amount possible, credit card debt forgiveness is for you.
Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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Can A Person Who Is Mentally Ill Be Held Responsible For Debt
Many people find debt management difficult, particularly if they suffer from mental illness. In fact, some mental illnesses can trigger overspending. Unfortunately, proving that a mental illness rendered someone incompetent to agree to a debt is a difficult and costly process. Individuals who struggle with mental illness, and their spouses, should seek legal advice for protecting their finances.
If You Are Mentally Disabled Can Credit Cards Collect Debt
In the 1990s, the mentally disabled population were often granted credit cards, regardless of their ability to repay a loan or capacity to enter into a contract. Depending on the severity of a mentally disabled individual’s situation, he may be protected from creditors. His assets, especially if they come from protected government payments such as Social Security Disability Income, are protected from creditors as well.
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Focus On Learning Healthy Coping Mechanisms
Even if you know youre going to have to answer to your therapist eventually, you may still have stressful moments where youre tempted to open a new credit card, or use the money in your checking account to shop instead of toward paying off your debt as planned. In a difficult moment when youre feeling tempted and your natural inclination is to buy things to self-soothe, its important to have a healthy coping mechanism to turn to.
Work with your therapist to make a list of alternatives to turn to when youre tempted to spend. What will be most effective depends on the person. Gharibian said calling a trusted friend, reading a book, taking a walk, or listening to music have been effective techniques for his clients, and that mindfulness exercises, meditation, and guided imagery might also be worth trying.
Federal Student Loans: Apply For A Tpd Discharge
If you are permanently disabled or if you are a disabled veteran, then you have the opportunity to eliminate some or all of your student loan debt. A program managed by the US Department of Education allows for certain student loans to be discharged for people with a Total & Permanent Disability .
If you are trying to pay off a William D. Ford Federal Direct Loan Program loan, a Federal Family Education Loan Program loan, and/or a Federal Perkins Loan or are trying to complete a TEACH Grant service obligation, your loan potentially qualifies for a discharge.
You will have to prove that you are totally and permanently disabled in one of three ways:
To find out if you qualify for debt forgiveness, start by applying for a TPD discharge. Upon qualification, youll have your applicable student loans forgiven providing your status doesnt change during a 3-year monitoring period and you continue to meet the programs requirements.
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Further Credit And Spending
Some mental health conditions can make it more difficult to manage money. Sometimes this can mean that you take out more credit that you can afford, or spend money on things that you dont really need. This can make your overall situation more stressful, increase your debts, and make it difficult to keep to payment arrangements with your creditors. In these circumstances it might be helpful to add a notice of correction to your credit reference file.
Is There Credit Card Debt Forgiveness For A Disability
- Is There Credit Card Debt Forgiveness for a Disability?
Life can be tough. This truth is evident if youre living each day with a physical or permanent disability and have credit card debt. Add a stressful financial situation involving reduced income, limited job opportunities, and rising debt. This stress increases to the point where you are considering .
Trying to pay off debt while making ends meet as a disabled individual is a daunting task. Thankfully, there are laws in place and opportunities available to help your situation. In this article, youll learn several options to protect the income you have, and eliminate your debt.
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First, there are a few things you should know when it comes to your debt as a disabled person. You have certain rights and protections when it comes to your debt. Here are a few tips to help you manage your debt situation.
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Expert Insight On Debt And Mental Health
MoneyGeek spoke with industry leaders and academics to provide expert insight into debt anxiety and stress and advice on managing mental health while getting out of debt.
Increased Risk Of Chronic Disease
There is an elevated risk of hypertension and other chronic diseases among those with debt. This is complicated because depression, in and of itself, increases the risk of illnesses such as hypertension.
In addition to the physical stress that is well known to be associated with depression , skipped medical care and a decrease in health-seeking behavior also shows how debt can lead to poor physical health.
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Will I Have Trouble Securing Future Credit
You may get your creditors to write off your debt in some conditions. However, you must keep in mind that any missed or late payments that occurred due to your illness will stay within your credit file for six years.Lenders refer to your when trying to decide whether or not to give you a loan or not.
If a lender happens to see missed payments in your credit history from previous debts, they may ask you about how they came about.
Some lenders tend to be apprehensive about giving loans to people with health issues, be it physical or mental health. This is because theyre not confident in your ability to pay back the debt.
If you go into your loan application with a revised plan on how you intend to pay back the debt, this can go a long way in convincing your lender to approve your loan.
If a lender gets the notion that you have your illness under control and you will be able to reliably pay back the debt, they will definitely approve your loan.
If youre having trouble securing credit, you could try seeking advice from an independent charity. They could turn you on to some lenders that give loans to people with poor credit scores. They may, however, have higher interest rates.
Consider Telling Your Creditors About Your Mental Health Issue
If you are finding it difficult to deal with your debts, then you may want to tell your creditors that you are experiencing mental health issues. It is your choice, but it may help with your negotiations.
Creditors have to comply with the law. In some cases, people with mental health conditions will be offered protection by the Equality Act 2010 which says that your creditors must make reasonable adjustments to help you.Most creditors will also have rules and guidelines to follow when dealing with clients who need extra support.
If they are aware of your circumstances a creditor may:
- agree to put collection activity on hold for a short period
- agree to contact you at set times only
- agree to contact you in certain ways, such as by letter rather than phone
- allow you extra time to gather information
- agree not to pass your debt to a debt collection agency and
- use specialist staff to deal with your case.
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How Creditors Can Dispose Of Your Debt
When you have repeatedly failed to make payments on a debt, your creditor may eventually decide that they no longer want to try to collect it themselves. The creditor may charge off the debt, but that decision does not affect your obligation to repay the amount you borrowed youre still on the hook for your balance even if your , for example. Some creditors, like Discover, offer hardship programs that may help you meet your financial obligations.
Your creditor may choose to work with a collections agency to try and collect the debt. In other cases, your creditor or the collection agency may go so far as to file a lawsuit against you in an effort to collect the debt. If the creditor wins its lawsuit against you, you will have a judgment against you and may even have your wages garnished in some states. Before any of this happens, you can seek the assistance of a non-profit credit counselor.
