June 2010

Need to Clear Debt? Consider These Solutions!

by Vincent Polisi on June 25, 2010

If you are knee deep in debt, you are not alone.  Sadly, as the economy took a nosedive, millions of Americans have found themselves turning to credit cards just to survive.  Ultimately, this has landed many people in the situation of having more debt than they know what to do with.
If you would like to clear debt but don’t know where to get started, consider these options.

The Old Fashion Way

Perhaps the best way to clear your debt is the old fashioned way!  Buckle down, set a budget and then slowly chip away at your obligations.  Yes, it takes time and it isn’t fun.  But, you don’t have to worry about further damage to your credit!

If this is an option for you, you probably should sit down and write out a plan of attack.  A popular method that many people use to clear debt is the snowball attack.  Pick your smallest account and put all of your additional funds to pay it off first.  When this account is paid, move on to the next smallest.  As you eliminate accounts, the amount you are paying to the smallest remaining card will continue to rise.  Continue the process until your snowball is down the hill and you have gotten rid of all your debts!

One thing you should consider is whether you will need to earn extra cash to successfully deal with your debts.  As an example, you can earn cash online.  Another option is to implement as many money saving ideas as you can.

Credit Card Debt Settlement

One alternative to clear credit card debt is to settle it.  This is where you negotiate directly with a creditor for them to agree to take a payment that is less than your full balance.  Typically they will want payment in full, but sometimes they will make payment arrangements – especially if you only need to make payments for a short time. (Like 6 months).  It can take some time to settle credit card debt but it can be done.

You can learn more about using credit card debt settlement to clear debts here:

Credit Card Debt Settlement

What about Settlement Companies?

There are over 2,000 debt settlement companies that have sprung up in the last decade.  Unfortunately, many of these are less interested in helping people clear debt and more interested in separating people who are already in trouble from their last dollars. Most of them don’t offer clear debt solutions! They typically will charge upfront fees of up to 20% of your credit card debt and provide you will no results.  In the end, you will end up with credit that is worse than you started with and creditors still barking at your door.  Working with a settlement company in no way protects you from being sued, nor will they come to your aid in the event that you are sued.  Your best bet if you want to clear debt is to do it yourself!

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Can You Settle Credit Card Debt On Your Own?

by Vincent Polisi on June 20, 2010


Yes!  While many people prefer to hire a credit card debt settlement company to deal with the sticky aspects of consumer debt settlement, it is certainly possible to settle your own debts.  In fact, thanks to the new bankruptcy laws limiting who can file, this is the only option for many people.  You will need to have the ability to stay calm through negotiations and the willingness to not give up.  Many people have been very successful in debt settlement negotiations and you can be too!  Let’s look at what you need to know about settling your own debts!

What Debts Can You Settle?

Typically, the only debts that you will be able to settle are unsecured debts.  Examples of these are credit cards, store cards, medical bills, bounced checks and personal loans.  Student loans are also unsecured but can be much more difficult to settle. Unsecured credit card debt is by far the easiest to settle.

Keys to Negotiating

  • Be Prepared!  Before you pick up the phone, you should already have an idea of what you can afford to pay.  It doesn’t do you any good to arrange for a settlement in an amount that you cannot afford.  You should have in hand your most recent account statement as well as any other communication you have received from the creditor.  Specifically, if they have previously sent you a letter offering a settlement, this will be very helpful to have.
  • In negotiating, the person who mentions price first typically looses.  For this reason, it is smart to let the creditor bring up price first.  This gives you a starting point to negotiate down from and gives you a good idea of where they are at.  Just remember – you don’t want to accept their first offer.  A card credit debt negotiation settlement can take time!
  • When you call, make it clear from the beginning that you would like to settle the debt.  Collectors are not typically friendly, so don’t be surprised if you are treated rudely.  You MUST have thick skin.  Keep in mind that chances are the person on the other end of the phone is a very lowly paid individual who may not have perfect credit themselves!  If they flatly refuse the idea of a settlement, ask to speak to their supervisor.
  • Make sure that you are professional.  Calls are typically recording and getting aggressive is not going to serve you well.  Avoid using any profane language or making insults.  It will not help with settlement credit card debt.
  • If speaking to a supervisor doesn’t work, don’t give up.  Send a credit card debt settlement letter to the head of collections and the president of the company.  Unlike when you were trying to talk with someone, this time you need to be very specific up front about what you are prepared to pay.  The indivudals who are actually answering for the companies bottom line may be much more willing to listen to what you have to say!

What Should You Expect to Settle For?

Ideally, you want to negotiate credit card debt so that your balance  is reduced by 35% to 60% of what you owe.  At a minimum, you want all of the late fees, over limit fees and finance charges removed from your account.  Ususally, this will add up to between 35% and 40% of your balance.  If the creditor is not willing to do this, you probably don’t want to settle at all.  It just isn’t worth the damage to your credit if you are only going to save 20%!  The creditor may come back to you at a later take and offer you a better settlement.

Keys to a Successful Settlement

When you start working on your card credit debt settlement, you shouldn’t expect to reach a settlement over night.  While it would be nice if things happened that way, the reality is that most financial institutions don’t move quickly!  Don’t get discouraged as you are going through the process!

You will want to keep good records every time you speak to someone.  Get the persons name, (If they won’t give you their last name ask for an employee number) and record the date and time you spoke with them.  Prior to making any payment, get a letter from them stating that they agree to settle for the specific amount.  NEVER rely on a verbal agreement – verbal agreements are not valid in most states and it is very likely that the creditor will not live up to their end of the bargain if you don’t have everything in writing.

Remember – debt settlement will hurt your credit but it is a far better alternative than filing for bankruptcy.

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