Figure out exactly how much you owe. Gather all the credit card bills and other loan bills you receive each month. Don’t forget to include any credit cards or loans that use “paperless” billing or automatic drafts. Add up all the balances.

Stop using your credit cards inappropriately. Credit cards should never be used to buy unnecessary items that you can’t afford. The right way to use a credit card is to charge only small amounts on it and pay it off each month. That way, you build a positive credit history (yes, you have to actually use your cards in order for them to benefit your credit history), but you don’t pay interest and you don’t get into debt. Please note that while you should stop using your credit cards unnecessarily, you generally should not close the accounts; that will hurt your credit scores.

Get organized and develop a payment plan, and stick to it. Determine which card or loan has the highest interest rate. You’re going to pay that one off first while making the minimum payments each month on the others. When the first one is paid off, you’ll move to the one with the next highest interest rate, and so on. You should pay as much as you can possibly afford on your highest interest rate card/loan each month. If you only pay the minimum payment every month, it can take literally decades to get out of debt, plus it can cost thousands and thousands of dollars in interest.

If you’re having trouble coming up with much beyond the minimum payment, you may want to take a closer look on exactly where all your money is going. Start keeping track of what you spend every day for at least a week. If you’re like most people, you’ll find that you are spending a lot of money on unnecessary things like coffee shop coffee, takeout food, bottled water, etc. Those are all examples of things that are much cheaper when you make or get them at home!

If that doesn’t help, evaluate your household expenses. Do you really need 500 cable channels, or could you drop some of them and save some money on your bill? Many of us are also wasteful–we leave every light and TV in the house on at once, we buy food at the grocery store and then let it go bad and have to throw it away, etc. Energy and food are too expensive nowadays to waste, especially when you’re trying to get out of debt!

If you have a savings account, you should use that money to pay off debt. Money in savings accounts generally earns much less interest than you’re paying on credit cards/loans, so it doesn’t make sense to contribute to a savings account when you’re in debt!

Last but not least, get your bills organized so that you don’t lose them and/or forget to pay them! (This is a common pitfall for a lot of people with bad credit.) Late payments are very costly: you get hit with late fees; possibly raised interest rates; damaged credit, which of course leads to higher interest rates; and worst of all, this all translates to more debt! It’s a vicious cycle that you must break if you want to get out of debt and/or restore your credit rating. You must pick one spot and one spot only where you will keep your bills. It should be in plain sight so that you can’t forget about them. You can get a letter tray for this purpose, and there are also mail organizers that hang on your wall. Also, get yourself a calendar and mark off the due dates for your bills. Again, it’s best to store your calendar where you will see it often.

Get professional help if you need it. If you’ve tried all the strategies above and you still can’t seem to keep your head above the water, it’s time to seek professional help. Some options for you might be debt settlement, debt consolidation, or as a last resort, bankruptcy.

Post from: Credit Repair and Debt Solutions

How To Get Out of Debt

Related posts:

1. How To Build Credit
2. Benefits of Debt Consolidation Services

So what can debt consolidation services do for you?

-They can negotiate with your creditors to lower your interest rates and possibly get any late fees reduced
or eliminated.

-You will only need to make one payment each month instead of several payments to all of your different
creditors. You will send payment to the debt consolidation service, and they will in turn divide the payment
up amongst your creditors.

-Once the debt consolidation service negotiates with your creditors to set up a repayment plan, any
intimidating and embarrassing collection calls you may be receiving will stop.

-Lowered interest rates mean that a larger percentage of your monthly payment will be applied to your
actual balance, rather than going towards interest. This can allow you to get out of debt faster than you
would otherwise.

Keep in mind that you may be able to negotiate with your creditors yourself rather than hiring a debt consolidation company to do it for you, although it seems that creditors are often more cooperative with debt consolidation companies than they are with individuals. You might wish to try negotiating yourself first, and if you aren’t satisfied with the results you can always consult the professionals.

But if the single monthly payments are important to you, you will of course need to either obtain a debt consolidation loan, or work with a consolidation service.

If you do choose to hire a debt consolidation service, it is absolutely crucial that you investigate every company before making a decision to hire them. Always check their record with the Better Business Bureau, because there are unfortunately many undesirable companies in the debt consolidation industry.

Last but not least, don’t underestimate the importance of learning better spending habits and money management skills. Debt consolidation can lay the groundwork for you to get out of debt and back on your feet, so you will be able to rebuild your credit and move on with your life. But it’s up to you to make sure you don’t get into the same situation again in the future. If you feel you need outside assistance in this area, it’s a good idea to seek a debt consolidation service that also offers credit counseling for no additional charge.

Post from: Credit Repair and Debt Solutions

Benefits of Debt Consolidation Services

Related posts:

1. How To Get Out of Debt

Before we continue, there are a few things you should know:

-We are talking about settling credit card debts only. This information doesn’t apply to other types of debts such as auto loans.

-You can hire a service to settle your debts, or you can try to do it on your own. It’s never guaranteed that a creditor will agree to a settlement, regardless of whether it comes from you or from a professional settlement company, but generally speaking creditors tend to be more cooperative with debt settlement companies than with individuals. If you want to go with a professional service, I recommend Curadebt.

-Please be advised that debt settlement should be a last resort; you should only use it when your only other alternative is bankruptcy.

-Credit card debt settlement can frequently reduce your debt by 30-70%, but it is not a “get out of jail free card”; you will likely have to pay income tax on any forgiven debt, and your credit score will also be adversely affected (although a settled debt is much better than a bankruptcy).

Now that we have all that out of the way, here is how to settle debts on your own.

First things first: do not attempt to negotiate a debt settlement with anyone other than your original creditor. If your account has been referred to a third-party collection agency, do NOT have any dealings with them.

In that case, contact the credit card company and inform them that you have fallen on hard times and may be forced to file for bankruptcy if you can’t find a way to reduce the amounts you owe. This should cause them to sit up and take notice, because chances are they would rather settle with you and get some of their money back, rather than let you file bankruptcy, which would probably leave them with nothing.

Bear in mind that in most cases, your account must be seriously past due before the creditor will be willing to consider settling. If you’re currently making payments on the account, you will need to stop before you approach the creditor about a settlement. Many credit card companies won’t settle until an account is approaching 180 days past due, at which point they will often “charge off” your debt and sell it to a junk debt buyer, usually for just pennies on the dollar. Clearly, it would be in the creditor’s best interest to settle with you because even if they reduce your debt by a significant percentage, they will still make more money than they would by selling your unpaid debt to a third party.

Once the negotiation process begins, proceed carefully. You should send all correspondence via certified mail with a return receipt, and be sure to keep copies of everything. If you speak to anyone over the phone, document the date, time, and name of the person to whom you speak.

Be patient and expect the process to take time; it can take anywhere from 3 to 9 months to reach an agreement on a debt settlement.

Once a mutually acceptable settlement amount is agreed upon, insist that you receive a copy of the agreement in writing before you make a payment. Be sure to ask the creditor to state in writing that they will never sell your forgiven debt to another party. This is important, because if they do that, you will then have a junk debt buyer harassing you for the remainder of the balance on that account.

Remember, if you don’t want to settle your debts on your own, or if you try but don’t get anywhere, you can always hire a debt settlement service. I personally recommend Curadebt because I know them to be ethical. If you decide to go with any other company, be careful who you choose. There are a lot of scams out there so don’t commit to any settlement service without researching them thoroughly first.

Post from: Credit Repair and Debt Solutions

Debt Settlement Tips

Related posts:

1. How To Get Out of Debt