One of the best ways to get out of debt is to do it yourself. If you can analyze your financial situation, you'll have better control over your money while enjoying a debt-free life. This article shows you how to fix your debt problems without any professional help. All you need to do is to follow these do-it-yourself steps to debt settlement, consolidation, management, deal with collection agencies, credit repair and bankruptcy.
If you're unable to make the minimum payments on your bills due to a sudden financial hardship, debt settlement may be the right choice for you. It's worth considering when the only other way out of debt is to file bankruptcy. This will help reduce your outstanding balance.
Usually the debts you should settle first are those having the highest interest rates. Settling these bills makes a lot of difference to your monthly budget. Check out the do it yourself steps to debt settlement and learn how you can negotiate with your creditors.
Conduct a thorough analysis of your income, expenses and debts. You'll need these facts in order to convince creditors that you can't make full payments.
Find out how much you can pay your creditors after getting hold of the financial facts. Start saving money.
Contact your creditors to start the negotiation process. Reveal the facts and make a settlement offer.
In all likelihood, creditors are going to reject your first offer. They may make a counter offer. Be patient and negotiate till a settlement agreement is reached.
Ask your creditors to send you a letter wherein the payoff strategy will be clearly written.
Pay the amount on the date mentioned in the settlement agreement.
Compute the total amount forgiven by the creditors for you've to pay tax on it.
Check the account status to find out if it has been updated properly. Watch video and check out the steps to settle debts in details.
If you're looking to reduce the interest you pay to creditors, debt consolidation is the smart choice. Here, you negotiate with your creditors to reduce the interest rates on your debts. Follow these steps to do-it-yourself consolidation below.
Prepare a list of your debts with the names of your creditors and arrange them in the order of priority.
Make a list of your income including wages and state benefits. Then calculate how much you can afford to pay per month on all your bills.
Decide who to pay first and make sure those creditors still hold the debt or if they have sold your debt to a collection agency (CA). Find out how to contact creditors/CAs here.
If your credit account has been turned over to a collection agency, you should ask them to validate the debt before you start paying. Use a debt validation letter to send your request.
You need to negotiate with your creditors/CAs to lower your interest rates and reduce your payments on your high interest debts. Make sure your total monthly payment doesn't exceed what you can afford and negotiate to waive off any late fees. Use one of the sample letters available here in order to negotiate with the creditors/CAs.
If you have multiple credit cards with small balances, you can consolidate them with a balance transfer. This is done by transferring balances on other cards to one having a low or 0% interest rate. So you make a single payment instead of multiple payments and pay much less in interest.
If you fail to manage your bills along with your daily expenses, it's time to organize your finances. This can be done by yourself using the Snowball Method of debt repayment. Here are some steps you can follow to get out of debt:
You'll have to deal with a debt collection agency when your account is assigned or sold off to them. Debt collectors will try to retrieve funds on the delinquent accounts. They may even seek legal help in order to get money from you. So, it's in your best interest to deal with them through the following steps and clear your overdue debt.
Check your credit report and find out if the alleged debt is really listed on it.
Be familiar with the debt collection laws so that you can take legal steps in the event of harassment.
Ask the collector about his/her name and detailed information of the collection agency politely.
Note down the key points of the conversation with the debt collector. In some states, you can even record the entire conversation.
Send a letter to the collection agency and ask them to validate the debt.
You can send a letter to cease all kinds of communication when (a) debt is not validated (b) debt has crossed the SOL period.
Inform politely but firmly about the amount you can pay on the debt. Negotiate with the collector to reduce the payable amount.
Ask the collector to send you a written agreement. Inform that you'll not pay anything without getting the written agreement.
Send payments via money order to the debt collector as per the repayment plan. Don't reveal your bank account details to the debt collector. Get more information on how to deal with debt a collectors.
Blemishes on your credit report can make it difficult for you to qualify for a loan or a credit card. So, you need to keep your credit report clean by all means. Have a look at the following steps you need to take to make yourself credit worthy.
Know about the factors that actually have created blotches on your credit report.
Report to the credit bureau if there is any typing error or inaccurate information on your credit report. Ask them to remove the inaccurate information.
You can even contact your creditors and ask them to rectify any mistake done on their part.
Create a prudent spending plan so that you can make timely payments and avoid delinquent debts.
Delinquent collection accounts hurt your credit score. If you don't have sufficient amount, then settle the debt with the collection agency.
Cancel the inactive accounts. Maintain the old accounts with long payment history.
Ask your creditors to give the proper credit history to the credit reporting agencies.
Use a secured credit card to establish a solid payment history on your credit report. Watch video on the DIY credit repair steps.
You can file bankruptcy to discharge your debts without the help from an attorney. However, since bankruptcy is a complex legal process and it involves a lot of paperwork, so it is recommended to consult an attorney.
If you're determined to file bankruptcy on your own, then here are a few steps you need to take:
Find out if you really can't pay off debts through other relief options since bankruptcy hurts your credit score.
Complete a credit counseling course and obtain a certificate 6 months before filing bankruptcy.
Go through the means test and determine the type of bankruptcy you need to file.
Keep all the documents ready and submit them while filing bankruptcy.
Submit your bankruptcy petition. Complete the paperwork and submit them to the bankruptcy trustee.
Disclose all the facts and answer all the questions of creditors. Know when you should file bankruptcy on your own.
If you don't feel comfortable negotiating with your creditors, you can seek professional help. Enroll in a free counseling session with a debt consultant from our community. The consultant will help you decide whether to choose debt consolidation program or go for a settlement.
Alternatively, if you have contacted a credit counseling agency for debt help, you may be offered a debt management plan to help you pay off your bills faster.