Vision Credit Education, Inc.

It sure makes sense that you should put off dealing with debt problems until you feel comfortable about your job security. After all, how can you commit to something if you are unsure about your ability to stick with it? It may sound reasonable to delay dealing with debt until the recession eases, but you actually could be making your situation worse by eliminating options.

There are several reasons why waiting to manage your debt can backfire:

1. Interest will continue to accrue on your accounts. By the time you take action, your balances could be much higher and your minimum payments may rise beyond your ability to stay current.
2. Late fees can also cause the debt to balloon. At $39 a pop, these can easily boost your balances to levels you have never seen.
3. Minimum payments can increase substantially. Your minimum monthly payments can increase by $20-50 for every $1,000 that your balances increase.
4. You can lose the right to join a debt management program. Such programs require that you can reasonably afford the payment. If you wait until:
   1. Your debts are charged off as uncollectible, or
   2. Your minimum payments rise well beyond your ability to pay, then you might become ineligible for such a plan.
5. Your credit can get far worse if you do not address your financial problems. As your financial problems worsen:
   1. Your higher debt balances reduce your credit scores
   2. Your higher credit utilization rates will reduce your credit scores
   3. Any delinquent payments will reduce your credit scores for a minimum of 7 years
6. Finally, a domino effect can result through universal default. Most creditors are again paying attention to signs of weakness in how you handle your other credit accounts. Any increase in balance or missed payment could cause other creditors to revoke credit or dramatically increase your minimum payment. You could also see much higher finance charges.

Credit counseling is necessary to help you determine the extent of your financial problems and to design an action plan for correcting them. Even if you find that you are unable to continue a debt management program due to loss of income, at least you have lowered your balances and preserved your payment history up until that point.

It is a fact that the earlier you try to tackle your debt, the more options that are on the table. The later you become, the fewer choices that you will have. Furthermore, you may be opening yourself up to adverse action such as legal action or employment repercussions. The best thing to do is to gather your information and talk with an Accredited Financial Counselor through a nonprofit credit counseling organization. Let them know how unstable your employment situation might be. They can help you design a plan around it.