Being in credit card debt can be a very stressful time for any person. People will look for help, and they soon find various Michigan debt settlement companies offering their help. But, why would you hire a company for something you can do on your own accord?
This article will explain to you how to settle credit card debt. It will tell you how to set up a budget, why you shouldn’t pay your creditors and how to negotiate.
Creating a budget for yourself is the first step and it’s a very necessary one. Without this step, we won’t have a settlement offer to make at the end of this process, because we won’t have any money. You need to make some lifestyle adjustments, or all your effort will have been for nothing.
Create a list of your financial situation. This list should include all your income, expenses and debts. This will give you a clear view of what your situation is.
Now, go through your list of expenses and see if there isn’t anything you could do without. We want to get rid of all unnecessary expenses. Everything from eating out to new clothes needs to go. We won’t be doing either of these things anytime soon. Save all the money that you can.
The next step is to stop paying your creditors. They will start calling you non-stop, but explain to them that you simply can’t afford the payments. You can’t give them what you don’t have, after all. Do not get talked into paying a small amount. You don’t have it.
Send registered letters to your creditors explaining the situation. Tell them you simply can’t pay, because you do not have the money. Save all correspondence that occurs in a file. You may need it later, if they threaten with a lawsuit. You will have something to fall back on.
After you haven’t paid for at least 6 months straight, you will start the negotiating process. It is important to wait at least 6 months, because it takes a while for your creditors to start to believe you won’t pay up. They will believe you’re going bankrupt, which is something they don’t want, because it will mean they don’t get anything.
Offer to pay them 40% to 60% of what you owe. Count the money you have saved, so you can make an offer you can actually afford.
Make sure your creditors send you a letter stating the debt was paid in full. We don’t want notes on our credit report that our debt was settled, because this will define us as a credit risk, which will make it very hard to get loans in the near future. Even if we would be able to get a loan, it will have massive rates of interest.
So that is how you clear your debt through debt settlement. This may make it look easy to do, but don’t be mistaken, it will be a very stressful time. You will have to answer constant calls from creditors, while keeping your composure. If you’re not up for it, you should think about stepping to a debt relief program such as Freedom Debt Management.
Tags: Credit card debt settlement, Debt Settlement, freedom debt management, settle credit card debt, settling credit card debt, settling your credit card debt
