There’s nothing worse than being in debt. When you’re in debt, everything from paying the monthly bills to sudden medical expenses can prove to be catastrophic — especially when the creditors come knocking in between paydays.
Wouldn’t it be nice to get out of debt? Well, luckily for you, getting out of debt isn’t as hard as it seems. There are a few simple steps that need to be followed to have a successful debt settlement experience, and we’re going to outline them for you.
3 steps to settle your debt
1. Assess the situation and figure out who your creditors are.
The first step to consolidating your debt is assessing your financial situation and deciphering who the creditors are that you owe. You’ll need to find out who you owe, how much you owe them, how far behind you are on your payments, and what kind of money you have to make negotiations with.
If you find that you owe more than one creditor, it’s a good idea to start the negotiation process with the one you owe the most to.
If you’re in delinquent status on any payments, you may consider setting up a new bank account. Here, you can put money in that can be used towards a lump-sum payment to your dedicated creditor. Generally, you’ll want to provide 50% of what you owe to make your offer seem serious.
Now that you know who your creditors are do a bit of research and find out what their policies are. Remember that creditors have no obligation to make a settlement with you and that if they turn down a settlement offer, you may have to wait until a new agency purchases your case before you can make your settlement.
Get a copy of the FDCPA. This document will spell out for you what your rights are and outline what creditors can and can’t do regarding your case. The FDCPA will go over the provisions that are in place to prevent creditors from harassing you.
2. Start a conversation and set your terms.
Before jumping into negotiations, make sure that you’re firm on what you can afford. Often, negotiators go into the process and get 20% knocked down, only to realize that the excess amount is still more than they can afford.
Be firm on what you can afford per month in terms of payment, and don’t stray from that amount during the negotiation process. Try to negotiate away any late fees that you’ve already racked up — these fees are the ones that affect credit scores so poorly.
3. Agree and pay your debt.
Before doing anything, ask your creditor for a written agreement. Be sure to read it carefully and understand the policies, terms, and payment amounts stated in the contract before you sign it.
After you have signed your contract, pay the settlement figure using either a payment plan or a lump sum. Once this has been done, you’re no longer in debt to the creditor in question.
If you opt to use a payment plan to pay the creditor, make sure you make your payments on time. Failing to make them on the agreed-upon dates could result in the contract becoming void, and a lump sum required immediately, which could put you into a tough place financially.
Conclusion
There you have it: the three simple steps that will get you out of debt. By following them, you can make the process smooth and straightforward and get the results you want.
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