So you’re ready to begin negotiating your way out of debt or hiring a company to do it for you. Before you jump head-first into an aggressive negotiation let us prepare you for what you’re up against.
First – understand that any step along the process where you do not have to pay back the full amount owed, your credit score will be dinged. Don’t expect to keep your credit report clean and negotiate with a creditor for a settlement. If you are dealing with the creditor themselves you can expect the person on the other end of the phone to be fairly reasonable and focused on finding a way for them to get ALL of their money back.
If you have been moved over to a debt collection company you are in a completely different situation. Debt collection companies are the thugs of the financial world. While your credit card company will almost always be pleasant on the phone debt collection companies live off threats. They know that the average consumer is relatively uniformed when it comes to the credit process and they use this to their advantage.
Make sure to read-up on the credit process and the real power that credit card companies and collection agencies have. You have many legal rights that can and should be exercised in times of financial hardship.
Debt settlement should be thought of as an absolute last resort when you can’t pay your bills and are considering filing for bankruptcy. While there are many rumors about the legitimacy of debt settlement it is perfectly legal and a great alternative when bankruptcy is just about your only other option.
Debt settlement Companies are available to help you contact and settle with your creditors oftentimes for less than 50% of what you owe! It may sounds too good to be true but you have to look at it from the perspective of the creditor – if you declare bankruptcy – they get nothing, so 50% is much better than nothing.
In some cases your creditor may try to determine if there is anything you are holding back or any assets that you could sell and in-turn pay them back. When you settle your debts with creditors you can expect your credit score to take a beating. The creditor will report your account to the credit bureau as “settled” which doesn’t look good when future lenders view your report.
Make sure to avoid a debt settlement company with outrageous fees. Sometimes debt settlement companies can ask for huge amounts of money to settle your debt. Make sure you stick with a company that lets you hold-onto as much of your money as possible or you could end-up in the same or worse situation in the end!
If your credit cards get out of control one of the best solutions available to you is debt consolidation.The idea behind debt consolidations is to combine all of your credit card debt into one single debt with a single payment. There are a number of companies that offer debt consolidation services – but not all of these programs are looking-out for your best interests.
To make sure you are getting the best deal you will first want to determine what the interest rates is on all of your credit cards. Use the average interest rate as the measure you use to determine if a particular consolidation loan offers an interest rate that would indeed lower the amount of interest you are paying.
If you can even shave 1%-2% off your payments you could save thousands of dollars over the course of paying back your debt. It can be enticing to have your credit card payments disappear and have only one payment to make each month. Beware scam companies looking to take advantage of people like yourself who are actively seeking a consolidation loan online.
You can easily search for information about the company on a search engine like Google. See what other people are saying about the service before you decide to transfer all of your debt to them. At PayOffDebt.me we have collected some of the best debt consolidation companies available online so you can get them right here from our site!
It can be easy to get-into significant credit card debt only to realize after the fact that you have no idea how to pay off the debt! If you are in the this situation – don’t worry – there are a number of ways you can pay off your credit cards and eliminate your debt!
We have compiled a five-step process for paying off your credit cards forever! Just follow the steps below and you’ll be one step closer to financial freedom!
- Stop using your credit cards: The first step in paying-off your credit cards is discontinuing your use of the cards. If you can’t create further debt you’ve just solved half the problem! Take your credit cards and freeze them in some water in a plastic cup and keep them in the freezer. You must follow this first step to be successful with the next four steps!
- Negotiate a lower interest rate: Did you know that you can call any credit card company and ask them to lower your interest rate? A simple phone call could save you thousands of dollars a year in interest payments. You can stop your debt from growing as quickly if you get the most competitive rates possible.
- Pay more than the minimum payment: If you want to pay off your cards before you become a grandfather then you’ll need to pay more than the minimum payment. If you can’t pay more than this you might be paying this off forever! Get a second part-time job if you need to but just make sure you can pay more than the minimum each month.
- Sign-up for relief programs: Credit card companies have interest rate release programs for those who qualify. If you are having trouble making your payments and cannot afford to pay each month then you will most likely qualify and find a generous rate reduction. The only caveat here is that you cannot use the cards while in the program – but heck – they are in your freezer so that shouldn’t be an issue!
- Borrow money from family: If you can take it ask your family for money to pay off your credit cards. You can even offer them a 1%-2% interest rate so they make some money on the deal. This is one of the best ways to ward-off those pesky interest rates that increase the time it takes for your to pay off your debt.
