Reduce debt payments – negotiate!

Negotiating with your creditors is a direct way to reduce debt payments, but it’s not easy. Remember, their job is to collect money from people who haven’t paid. They don’t care about you or your problems – they only care about the money they’re owed. How can you be successful when negotiating with them?

  • Most importantly: you should be trying to uncover your creditor’s bottom line. What is the minimum they’ll accept? It varies from situation to situation, but 50-70% is not out of the question.
  • Do not agree to pay more than you can afford under any circumstances. You know your own financial situation better than your creditors do, and agreeing upon a settlement package that you can’t afford puts you in a very bad position.
  • Do not be intimidated. You owe money, but you still have rights. Read the Fair Debt Collection Practices Act (FDCAP). Do not let them threaten or harass you.
  • If you make a request that is denied, ask to speak to a supervisor.
  • Negotiating can take days or even weeks. Try not to get discouraged.
  • Your creditors will usually find a lump sum payment more attractive than a payment plan. Keep this in mind when negotiating.

Finally, when you come to an agreement with your creditors, make sure that every detail is put into writing, then signed and dated by both parties.

September 1, 2010 | admin | Tags: | No Comments »

How to reduce debts: the big picture

Here’s a quick tip for those want to know how to reduce debts: the longer you have it, the longer it lasts. Think about it for a minute.

You got into debt in the first place because you didn’t have enough money to pay for things. Now that you’re in debt, you still don’t have enough money to pay for things, and you have to pay back the debt that you owe. Then there’s interest to keep in mind as well.

Let’s face it, in most cases you won’t be able to get out of debt as soon as you’d like by simply making small spending cuts. If your debt is large – and if you’re reading this article, it’s possible that it is – you’ll want to look to your lifestyle. Can it be adjusted to help you reduce your debt in a shorter time? Lifestyle changes are significant, but significant action generally produces significant results.

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Services to reduce debt – helpful or scam?

Debt reduction services are frequently advertised to help people with financial troubles. But are these services to reduce debt really helpful or are they only interested in helping themselves? The answer, as you might expect, is a little of both. They can be a useful tool for your financial situation, or they can put you further in debt.

Say you are considering using the services of one of these companies. As with anything, you will want to research the company. Just because the company is run as a non-profit organization doesn’t mean they are trustworthy. What in particular should you look for?

Fees are important to take note of. They can be disguised as “required contributions”. Read any written agreement carefully – it should describe the services they are to perform, payment term for said services, how long it will take to achieve results, guarantees, etc. Know what you are signing up for. You will also want to verify that your creditors are willing to work with the agency you choose.

Any company that claims they can instantly repair your credit score is a scam. Maybe they do this  by creating a new, false identity for you. In any case, it’s illegal. Rebuilding your credit is a long-term process. If it sounds too good to be true, it probably is.

Any company that requires you to pay money to get a loan should also be avoided. Advance fee loan scams are illegal – the FTC requires that no one can require a payment until you actually receive a loan or credit. Be wary of debt consolidation loans – don’t be quick to give away your credit card, bank account, social security number, etc.

Finally, one of the best ways to protect yourself from being scammed: check the company’s standing with your state attorney general and the Better Business Bureau. Find out how long they have been in business and their reputation. Using a company that is a member of the National Foundation for Credit Counseling (NFCC) is also a good idea.

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Make lifestyle changes to reduce debt quickly

Most of us don’t like changes – especially lifestyle changes. However, if you want to reduce debt quickly, they can be an effective way to do so. Here are some specific ideas to consider.

Smoking. If you smoke you already know this and have probably thought about dropping this expensive habit. It’s better for you to quit – for both your health and financial well-being. But I’m not here to lecture you.

Cable / cell phone. Are they really necessary for you? You might think so, but people lived without cell phones for a long time. Without cable, you might become more productive as well as saving money! Of course the savings aren’t huge, but they can be over a period of time. And keep in mind that you are trying to reduce your debt as quickly as possible, after all.

Eating out / coffee shops. Many people enjoy the convenience of having others prepare your food for you. But preparing your own food is cheaper – the extra costs of eating at restaurants can add up faster than you think. Who knows, if you learn to cook well enough, it might even taste better too!

Housing. This is a fairly big decision, but if you are serious about reducing your debt, consider moving to a cheaper location or getting a roommate. Big decisions can result in big savings.

Car. If your household has more than one car, you can save a significant amount by dropping one. Save on car payments, insurance, gas, maintenance, etc. There are benefits to alternate methods of transportation as well. Carpooling and riding the bus are good for the environment; biking is a good form of exercise.

Schooling. Fact: private schools are expensive. It depends on the school, but it is probably safe to say that you will save thousands each year per child you send to public school, rather than private.

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Reduce debt fast, faster, fastest

People with debt wants to reduce (and eliminate) it as fast as possible. If you are committed and you want to reduce debt fast, you have probably already looked into developing spending plans, debt consolidation, getting your interest rates reduced, and any other helpful services to reduce debt. Most likely, your debt still isn’t being paid off as fast as you’d like. What more can you do?

The simplest way to reduce debt faster is to put more money towards paying it off. If you don’t have any extra funds, you can always raise them with a little effort. Sell stuff for additional income – everyone has things they don’t need! Put any skills you have to work making money. Are you good at teaching? Try offering tutoring services. Can you fix things around the house? Offer a repair service.

You don’t even necessarily need to be skilled at something to make extra money. Depending on your level of commitment to reducing your debt fast, you can always look into taking a second job. Spending less combined with earning more will always result in your debt vanishing quicker.

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