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If you've been struggling to pay down debt, you're not alone. Many people are in the same proverbial boat, floating into deeper and deeper debt waters. If you're in need of a lifeline to pull yourself out of debt, explore the following three tips to help you settle your burdensome debts.
Settlement Negotiations
Credit card companies are making billions of dollars each year on what are essentially unsecured loans. These companies are unable to seize property or assets from those who owe them money.
If you find yourself making only the minimum payment, or if you're unable to keep up with the minimum payment amount, you are a candidate to negotiate a settlement.
Sometimes credit card companies will take pennies on the dollar for the settlement of your debt. In essence, credit card companies don't want to lose money. Securing some money is better than none in cases where people stop paying or file for bankruptcy.
What if you owe the IRS back taxes? Well, the same principle holds true. The IRS is often willing to take less than what you owe in what is called an offer in compromise. You can make an offer and the IRS will either accept it or counter it with another offer.
The only problem with this approach is that you need to have the money to pay a lump sum. Perhaps your tax returns, or a personal loan from family or friends, can be used. In any case, be sure you have the funds before negotiating a settlement.
Deferrals
You can also contact your creditors and request a deferral. You have many ways to qualify for a deferral, and many credit card companies readily accept them. If you've recently lost your job, or if you've suffered an injury or illness that has limited your income, you are a candidate for requesting a deferral.
Contact your credit card company and ask how you can apply. In many cases, you can do so over the phone. You should be realistic in your request for a deferment. Ask only for the time you need to get back on your feet financially and resume payments. You won't avoid interest accrued over the deferment, but you won't suffer the damage of late fees and lower credit scores.
Installment Plans
Many credit card companies are willing to set up longer payment terms if your current situation isn't sustainable. Know what you can afford to pay each month before you contact the credit card companies with a proposal. You will end up paying more money in interest this way, but the relief in your monthly bill is worth it.
Be sure you live up to your commitment when agreeing to an installment plan. Creditors will often revert back to the primary agreement if you are late, and this arrangement will worsen your position if you need to negotiate again with your creditor.
No matter what your debt is, you should never neglect it. If the monthly burden is too high, try one of the three strategies above to lessen the financial strain. Create a plan and stick to it, and you'll find yourself on the road to financial recovery soon enough.
