Your debts are piled up to an amount that you can not see past them. Your view into your financial future is blocked by your unpromising present. You're feeling hopeless and helpless. Well, do not despair. There is hope and there is help.
If you are considering bankruptcy, then your debts have not had the attention they needed. It could have due to many factors – eg, medical emergency, divorce. Regardless, you need to look at this as an opportunity to get your financial life in order.
You will need to address certain specifics in order to get a custody on your debt and forego bankruptcy. Complete the checklist and consequent activity below to get started:
* Do a budget. If you do not already have one set up, you need to do one now. Make note of all your expenses and income from the 1st to the 31st of the month. Put it all in one place, whether you put it in Excel, Microsoft Money, Quicken or some other software. Make sure you keep expenses separate from income. Note the amount you have left over.
* Obtain a copy of your credit report. All three major credit reporting agencies are required to provide a free copy of your credit report to you every year.
* Note any discrepancies. Notify the credit reporting agencies of any incorrect information, including any inquiries to your credit report that you did not approve.
* Identify all accounts that are late. Organize them from the accounts that show the most months not paid to the least months not paid.
* Settle your debts with your creditors. This will be your strategy. Your final frontier will be to settle your debts to affordable payments every month. What is left over from your budget? You will divide this out to pay on each of your outstanding accounts with your creditors.
* Calculate what it will take to offer a settlement of 30% for each of your past due accounts.
* Call each creditor and make the offer. It is important to include in the offer that the seller will delete all negative notifications to your account and indicate that it is being paid on time for the duration it takes to pay off the debt … as long as you are making your payments on time.
* Do not be discouraged if your creditors balk at your first offer. In a week or two you'll receive a letter from the creditors you called with either an acceptance or counter offer. Do not budge from the 30%, unless it becomes apparent over several weeks' time that they will not accept it. The more time that lapses since your last payment on the account, the more your creditor will work with you.
* Keep copies of all communication with your creditor. If a phone conversation, make note of the date / time of call, representative's name, content of discussion and anything that agreed to do.
* Do not pay anything until you receive it in writing … and signed! Your changes with your creditors have paid off and you've come to an agreement. You receive the agreement in the mail. Is it signed by the creditor and does it indicate that this is the final settlement amount of your debt and does it state that the creditor will delete all negative notifications to your credit once you start paying on the settled debt amount? If not, send it back for corrections. Do not sign anything until it contains all agreed upon discussion and the creditor has signed on the dotted line.
* You've signed the agreements, now what? Do not pay your payments out of your own bank. Do not let your credit know know where you bank or where you work. Get a money order from another institution other than your own bank to pay your monthly payments. You can buy USPS money orders for $ 1.05. That way if you ever become delinquent on your payments, no creditor can garnish your checking account or your paycheck.
* Pay your payments on time all the time. If you stick to this rule, you'll be successful in staying out of bankruptcy. Occasionally, you will even become debt free in the process as long as you do not apply for any more credit.