7 tips to help you settle your debt on your terms
Jennifer Smith (not her real identity) had perfect credit. There were no missed payments or problems with huge debt. She was left with almost $ 65,000 in personal debt after her company went under.
Jennifer says, “I was panicking that I would have to file for bankruptcy.” “I had great credit prior to this financial crisis. I was stunned that I would be unable to pay my bills.”
Jennifer was fortunate enough to find a debt settlement program via https://dedebt.com/. The low-cost program, contrary to other debt settlement firms that settle for clients, taught him how to resolve his own debts.
With the help of the $ 10, program, she settled a Citicard $ 35,000 bill for $ 9,000 and two Chase $ 6,000 bills for $ 1,250 each. She is now in the process to pay off one more American bank card. After that, she will be able to start rebuilding her credit and financial future.
Jennifer isn’t alone in settling for pennies on a dollar in difficult financial times.
Banks are aware that people are in difficult times, she said. This means they are ready to negotiate with customers who request help.
Are you able to pay off your own debt?
Jennifer said that it wasn’t difficult to pay off her debts. However, it requires emotional stamina as well as the drive to see it through. Other experts in debt settlement agree.
Cynthia Johnson Rerko, an attorney who specializes on financial restructuring, such as lump sum debt settlements, states that you must “tap into all of your inner strength…and your social abilities once you start calling in your creditors to try to settle the debts.”
To put it mildly, dealing with stubborn creditors, stopping payments and raising money to pay lump sum settlements can be challenging. However, if you can manage your emotional turmoil and take a few simple steps to resolve your debts, you will most likely be able to do so on your own without the need for a costly or unreliable debt settlement service.
Get advice from the experts
Although it is not always easy, we aren’t saying that it is. This can be one of your most difficult financial decisions. It takes time, you won’t be able pay the minimum amount of your debts and creditors will harass you every day.
However, if your debts are too high, it may be worth the effort. Jennifer and many of Rerko clients were in this situation. If you find yourself in an untenable debt situation and wish to avoid declaring bankruptcy, these are some tips to help you get out of it.
1. Remove emotion from the equation
Jennifer can confirm that debt settlement is emotional taxing. As we are all taught, debts must be paid. Stopping paying debts can seem scary and immoral.
Additionally, creditors use dirty tactics to get your emotions up, whether it be fear or anger. Although these tactics are often illegal, creditors may still employ them.
Rerko advises that emotions be removed from any debt settlement process. It’s about your business, she stated. “Don’t let creditors intimidate or talk to you in a different tone than a professional voice, with a professional approach to finding solutions.”
2. It is going to take time
People believe that debt settlement can be accomplished in just a few phone calls and months. Unfortunately, this is false. Jennifer was able, months ago to pay off some of her credit card debts. However, she is still working to repay the new debt. You must persevere, even though you may have to talk with the creditor many times before you can reach a settlement agreement.
Rerko states, “Recognize that it’s unlikely you’ll get a satisfactory resolution in your first phone call.” Rerko states, “Recognize the fact that it is unlikely you will get a satisfactory resolution in your first phone call.”
Although you might have to let the carrot sit for a while, most creditors will eventually bite.
3. Stop making payments
This is critical: creditors won’t agree to settle your debt if there are no payments. Remember that the debt collector wants to make as much money as possible. If you are not making regular payments, the creditor does not have an incentive to settle with your debt.
Creditors will usually be open to negotiation if you stop paying your bills. They know that bankruptcy can result in little to no compensation. This motivates them accept what money is available to help you settle your debts, and avoid bankruptcy.
You must remember that there are potential risks if you stop making payments. Credit score can plummet, and creditors could choose to sue you.
4. Save reasonable lump sums
Cash on hand may allow you to pay immediately. You might need liquid assets if you don’t own any. In this case, you could be able to pay the creditors off and put the money in a savings account.
Rerko and other debt resolution experts agree that “Cash is King” with creditors. . . . Creditors may believe they are going to have the debt written off. This is also known as “eating” any balance owed to them. You can pay off debts for pennies per day, as Jennifer did when she paid in cash.
Jennifer also points out that lump sums are very significant. His settlement program explained that payment plans should be avoided because, if I mess it up due to unforeseeable circumstances, I would have even more credit and financial problems.”
Don’t accept calls from creditors if you don’t have any money. You can sell what you have and save what is left. If you have enough money, you can pay your creditors a lump-sum payment.
5. Let your wallet guide you
What you can afford to pay as a lump payment is more important than what you can offer. Jennifer’s Debt Settlement Program explained that it was my wallet that dictated how much I had to pay and not what I owed [or what [creditors] would attempt to negotiate with me].
Creditors may make counter-offers in order to obtain a greater settlement. You can’t just pay less if you don’t have the money.
Rerko advises that debtors “[divide] how much money you have to pay off your loans by the total amount you owe.” If you owe your creditors $6,000 but have $ 1,700 cash, you’ll have 35.3 Cents to pay every dollar of debt.
Jennifer can confirm that creditors are happy with 35% or less of what they owe. Keep delivering only what you can afford.
6. You can always look for an alternative plan
People with low incomes and high debts often prefer to settle their debts than file bankruptcy. But regulations don’t always work. It is possible to find an alternate plan that works for you if the regulations don’t work.
Rerko points out that debt settlement is most effective when there is cash available or you can get cash quickly to pay off your debts.
Chapter 7 bankruptcy is an option. It could eliminate most of your debts or give you a fresh start. Chapter 13 bankruptcy could also be an option. It will allow you to restructure debt payments to make them affordable.
A qualified lawyer will be necessary to help you evaluate your options if you do decide to file bankruptcy.
7. Make a plan for rebuilding your credit
The process of settling personal debt is not easy and will negatively impact your credit rating. You will be required to stop making payments for several months until you have settled your debts. Once the debts are paid, your credit reports will likely show that they were not tuned for more than you owe. This is a red flag that will remain for many years.
Do not lose hope. You can often settle your debts faster than filing for bankruptcy. You will need to create a plan to rebuild credit after you have paid off your debts. See our credit section on Dough Roller for more information. This section is packed with tips and advice that will help you rebuild your personal credit.