Making the Resolution to Get Out of Debt

Posted by Philip McClarence

September 4, 2008

by Philip McClarence

Amongst those who make New Year’s resolutions, getting out of debt is a right up there with losing weight and quitting smoking. When a person owes a large amount of money, they have a weight on their shoulders that keeps them from moving forward. They don’t just need to get out of debt; they need to stay out of debt. If this describes you, read on.

Analyze your Credit Reports, Negotiate with Creditors and Consider Consolidation.

Analyzing your debt will be a critical step in the right direction. All three credit bureaus have an impact on your credit worthiness, so it is important to get copies of them and make sure each contains correct information. If negative history is haunting you, write letters or make calls, and see about getting those items removed. If something is reported erroneously, don’t be afraid to challenge it.

Try to settle smaller debt and lower your monthly payments. Offer what you can pay and not what the balance shows. Often, creditors will be happy to get what they can rather than lose all the money. Remember to get an agreement in writing before you send them money. When creditors give you a difficult time despite the fact that you are being proactive in avoiding bankruptcy, just step back and get ready for the next phase.

Loan consolidation can be a great alternative for those in financial distress. Once you have negotiated and can do no more, many companies offer low interest loans for consolidating all your debt (if your credit score is acceptable), and if not, debt counseling agencies are resources that contact your creditors for you. They may be able to renegotiate payment and interest terms that will allow you to make one lower payment for a fee.

In the meantime, if possible, take on a second job, sell what you don’t need and cut up your credit cards. Low interest loans often mean longer terms so do your best to pay more than the minimum payments on your consolidation loan. If you find consolidation is not your answer and you have no other choice, then bankruptcy is a valid option.

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