Picture this: Youre scrolling through your web app admiring all the cool things you cant afford.
Heck, you could get a cat.
So you sign up, get approved and get a fluffy cat.
A few days later, that card is in your mailbox.
Fast forward 10 years.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
The point is: No one dives into credit card debt on purpose.
It creeps up over time in the form of a just-this-once and an Ill-make-up-for-it.
This will also help you determine if you have any debt youre not legally obligated to pay.
But certain creditors may keep harassing you to paying on it again.
Always consult your credit report before agreeing to anything.
And you dont have to wait until your credit is in the dumps to start negotiating.
Debt settlement is the process of negotiating with your creditors to ultimately pay less than what you owe.
As a last resort, you’re able to declare bankruptcy.
Youll need to be connected to the representative who handles settlements specifically.
Companies may call their settlement options and departments different things.
Some names include:
If youre in collections, your debt collector is probably already calling you.
Theyll probably have corresponded by mail, so the information should be in the letter.
Dont let anyone bully you into terms you cant afford, Solomon said.
And if they agree to something, have them email it to you before you get off the phone.
When youre talking to creditors, its important to firstknow your rights.
Its also good to have an idea of what you might realistically settle for.
Every time your debt is sold to another company, it gets bought at a lower price.
So the more times your debt has been sold, the lower you could negotiate.
Never take the first offer.
If youre settling with a payment plan, send a registered letter outlining the payment schedule in detail.
Never give a debt collector access to your checking account through electronic withdrawals or by paying with checks.
Money orders are the safest way to pay your settlement.
you might also ask that they remove any tradelines associated with the account from your credit report.
And you should prepare to pay taxes on the amount forgiven.
You may want to put all the negotiating off on a debt settlement company.
While this sounds like an easy out, youll pay for it.
Then at the end, youll be paying them a fee of 20-25% of the settlement amount.
Theyre better for your credit, save you a lot of time and are easier to manage.
Jen Smith is a staff writer at The Penny Hoarder.
She and her husband paid off $78,000 of debt in less than two years on two less-than-average salaries.
She gives money-saving and debt-payoff tips on Instagram at @modernfrugality.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
