Before resorting to a debt settlement company, lets explore self debt settlement options.
How does debt settlement works?
Well, lets say you owe collectively $25K in credit card debt. You are probably paying $1200 a month just to pay minimum balance. This doesn’t include if you missed payments, late fees etc.
The debt settlement company will say OK, you can now pay $300 a month and it will save you tons of money and you pay this amount for 36 months
Sounds great doesn’t it?
Well for our client Jill, it was a nightmare.
What Jill didn’t know is that yes they settle but only after you are late for three months or more. This caused her credit score to drop hard and fast!
What Jill also didn’t know is that she is paying into something called an escrow account. That $300 a month builds up over time and that way they can negotiate on Jill’s behalf.
What Jill really didn’t know is that she could have called the creditors herself and done the same thing.
Before doing debt settlement with a company, try these 10 steps that can lead you to be debt-free.
1. Know all of your debt. Create a spreadsheet with creditor, amount owed and due date. There is also a really good budget planner you may want to invest in.
2. Determine if there are any credit cards you can pay off. After pay off DO NOT CLOSE the account. Just stop using the card until you are in a better position.
3 Call your creditors and ask for hardship programs. They all have them and will work with you.
4. Call your auto loan company ask them for a deferment. This will free up some money for a couple of months to pay down the credit cards.
5. Sell things you no longer use. The goal is to make extra money. I’m sure you can find something that someone wants to buy.
6. Turn your passion into cash. We are all good at something, put a price on your talents.
7. Budget. Look at your cable bill, cellular bill and see where you can save. You will be surprised at the savings.
8. Dine in. You will save a lot of money dining in verses eating out.
9. Save lunch money. Bring your lunch for a couple of months. If you normally spend $10 a day, that’s $50 a week. You can apply that to bills.
10. Stay determined. If you really want to change your situation, stay focused and motivated. Dave Ramsey has a really good book on budgeting titled Financial Fitness.
Before you give up, know that you have options and explore all avenues.
Oh, and for Jill, she came to us after she finished the debt settlement program.We helped her with some credit repair. We discovered errors and was able to remove negative items off her credit report. She purchased credit trade lines and was able to get an unsecured credit card on her own. Now Jill knows better.
If you are experiencing credit issues, please email email@example.com for FREE CONSULTATION