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Jeremy Schalf

Paying Off Your Debt

Decide to Stop Creating More Debt

Recognize that creating more debt will only make it harder. If you continue to create debt you’re only compounding the problem and adding to your debt crisis. If you have credit cards with an available balance put them somewhere they are not easily accessible, perhaps a safety deposit box. You may even have to resort to spreading them if you can’t resist the temptation to charge up more debt.

Pay More than the Minimal Payment Each Month

By paying the minimal payment due you are actually prolonging your debt and paying thousands of dollars in additional interest that could be used to pay-off the principle debt. By adding just a few more dollars to your payment each month you will be surprised at how much you will save and how much faster your debt will be paid-off.

Target One Debt at a Time

This is a strategy that will help you not only pay-off your debt but also help you achieve small goals. By reaching these small goals it will help you continue on your journey to paying off your debt. Start with the lowest balance and apply ever single bit of extra monthly income you have at this debt until it is paid off. Now you can take the extra PLUS the minimum you were paying and ably it to the next highest balance. Just continue this strategy until all your debts are paid off.

Look for Ways to Earn Extra Money to Pay Off Your Debt

Obviously the more you are able to apply toward your debt payments, the quicker you can get the debt paid off. Some ideas to raise extra money might be sitting right in your home. How about selling some of those items that you no longer need or use? What about starting a home based business? Review your current monthly expenses and see what can be eliminated. The list of things you can do to raise extra money is endless.

Negotiate a Lower Interest Rate with Creditors.

If you understand how interest works you will know that it is your enemy. Interest in fact is what keeps you in debt for so long and robs you of having extra money to do the things you desire or need. Talk with your creditors about lowering your interest rate. Many times they will offer you a lower rate with shorter term so your debt will be paid off quicker and you will save a ton in interest payments.

Process Of Debt Recovery

For many, the debt recovery process stops here – a campaign of letter writing and protracted phone calls is sufficient to extract from a wayward borrower, the repayments that are due. There is no doubt that this element of the process is integral to the smooth resolution of many debt cases. However for the aforementioned unscrupulous debtor, the service of process is merely a heads up – a cue to become slippery and attempt to avoid payment. In these cases, more aggressive actions are warranted. Unfortunately, the scary, intimidating stereotypes held by the public towards the debt collection industry are based on practices adopted only towards the most extreme cases, which have been generalised by the media and word of mouth to be mistakenly applied to the average case of debt collection. In reality, these cases occur as described before – largely without event. Even in more severe cases, the language “aggressive action” gives an overtly sinister connotation to behaviour which essentially amounts to the company being persistent – their actual action can go no further than issuing legal documentation and serving continual reminders to try and prompt the debtor to settle the money they owe.

The most extreme cases involve debtors disappearing entirely – changing names, leaving the country and so on. For these debtors aggressive legal action is simply not sufficient – it becomes the domain of very niche companies that specialise in the collection of these extreme and ludicrous

About Tracing Debtors

A look into the financial history or an individual can often be very illuminating for a debt recovery firm. Commonly, failed payments can be attributed to a number of reasons: the debtor may have fallen on hard times – this would be indicated by financial records that indicated that the person was a reliable payer until a certain date, at which point they run into problems. Others, are simply unaware of the payment terms and need to be prompted by a standard reminder. On other occasions, a customer may have simply moved address and in the ensuing disorder, failed to inform their various financial obligations, resulting in their falling behind on payments. Finding the new address can take finesse, but otherwise these individuals are often regular, if disorganised, payers. In other circumstances, there may be conflict between the customer and the client – the customer is unhappy with the services rendered or products supplied and simply refuse to pay. This can put a debt recovery service in an awkward position, unable to arbitrate between the debtor and their client – this is usually a case for the courts. It may be that the product was sent by the client but never arrived with the debtor, leading to both parties feeling out of pocket.

In all of the above cases, as well as the more extreme cases of serial debt avoidance, the ability to trace a wayward debtor and research their circumstances can be instrumental in informing a collection agency of the best strategy to use when approaching the debtor. Heavy handed tactics designed for debt avoiders are inappropriate for use on all but the most dire of cases, while a very softly-softly approach can be similarly inappropriate for a reluctant payer.

Coping With Debt and Retirement

Get professional debt advice

Research conducted by the Prudential recently showed that one in five people hoping to retire in the UK this year will do so with more than £30,000 worth of debt. Wales was at the top of the list in terms of numbers, with 26% of people retiring with significant outstanding debts.

Unfortunately the average retirement income from an annuity is at a 6-year low and as a result thousands of retirees will find themselves with much less to live on each year than they need to pay their household bills, living expenses and debt payments.

If this sounds like your situation then you should seek professional debt advice as soon as you can. A qualified financial advisor can help you to make the most of any pensions and investments you have while also showing you where you can save money in everyday life. In addition though, debt advice, Wales in particular, is vital if your entire retirement income is insufficient to cover your outgoings including your debt payments, and if things are very bad a debt advisor can explain the debt options available to you.

Claim the benefits you’re entitled to

A lot of people reaching retirement age are entitled to benefits they know nothing about, and again a debt or financial advisor can provide vital information. Among other benefits you may be entitled to you can include:

Pension credits
Rent or council tax benefits
Winter fuel payments
Attendance allowance
Carer’s allowance

There is no shame in claiming benefits during your retirement years and if the extra income helps to pay your debt commitments then so much the better. Again, professional debt advice will provide more information on the benefits available and whether you are eligible to make a claim.

Claim your freebies

Most people of retirement age are eligible for things like a free bus pass, free health care and in later years a free TV license. These things are all worth claiming because the money you save in terms of prescription costs, dental fees, optician fees and bus fares can be used for other things, including paying off your debts. Again there is absolutely no shame in claiming what you are entitled to and over the course of a year you can save several hundred pounds in healthcare costs alone.

Struggling With Debt

There has been a huge increase in the number of families relying on food banks this winter to keep them afloat during the cold months. It’s a difficult position to be in when you find yourself choosing between turning on the heating or stocking up the fridge.

Families that are struggling with debts will find their financial position even tougher, because they don’t only have to contend with soaring food and fuel prices, but huge chunks of income are eaten away by debt repayments every single month.

People that are unable to cover their usual household expenses, including shopping and heating, because of unmanageable debt, need to take action. The longer financial difficulties are ignored, the harder the problem becomes to resolve, so it’s imperative that people start as soon as possible. Facing up to debt worries and financial problems can be really scary – to the point that some would prefer to shuffle them under the carpet. It’s important that families in this sort of trouble remember that there are plenty of debt solutions out there that could help the strain on their income.

With food and heating devouring through more and more income each month, there is bound to be less cash leftover to put towards debt repayments. Although the demanding letters can often be frightening, people with debt need to prioritise their spending and ensure that the family are kept healthy and warm.

Families struggling with debt in Scotland are able to access a number of debt solutions that can cut the cost of debt repayments. One of the most popular schemes is a Trust Deed, which is an alternative to bankruptcy.

If debts are reaching unmanageable levels, above £10,000 and to multiple creditors, you may be able to enter into a trust deed. This debt solution was introduced by the Scottish Government just a few years ago to help people in difficult financial situations.

You will need to work with an insolvency practitioner (IP) to work how much you can afford to repay each month, once your household expenses have been accounted for. Your IP will apply for a trust deed on your behalf; they will submit a proposal to your creditors which details how much you are able to repay.

The trust deed will usually last for three years and as long as you have kept up to date with your repayments, any remaining debt will be written off.

Effective Debt Management Advice

Troubling situation

Although many financially indebted consumers do not look forward to seeking out professional financial consultants on eradicating their financial dilemma, there are limited alternatives for their consideration if their debt level has escalated to an uncontrollable volume.

Consumers in debt usually run away from the facts and belie themselves that they can work out their financial problems personally. Embarrassment is the main factor of seeking professional financial assistance; ego is another. However, the sooner the financially troubled consumer seeks the assistance of professional financial experts, the faster they can be eased of their embarrassment and financial burden.

When a consumer gets into debt that is running out of control, it is crucial to seek professional financial assistance as the situation has gone beyond a personal control. Proper financial and legal knowledge, skills and actions must be undertaken as quickly as possible to keep the debt situation in good control.

Professional sources

The market has plenty of professional financial consultants who are well versed and qualified on debt management. Their services include providing the best advice to ease the financially troubled consumer of the current financial circumstances as best as possible.

These financial professionals have the right knowledge and tools to guide the consumer out of a debt situation without getting the heat from creditors and the law. The debt management advice is always the best to suit the respective consumer’s financial situation without too much generalization. The recommended resolution steps of action would be in accordance to the state law that would offer protection to the consumer from creditors’ harassment.

There would be confidentiality in the debt control advice offered; the best solution is worked out with the consumer’s understanding and consent to resolve their debt issues.

There would also be an assigned debt advisor who is trained and qualified to walk through the whole debt management journey with the consumer until the latter is put back on their feet.

Negotiating Debt Settlement Options

Understanding Your Financial Situation

When you seek help from a credit company, the manager will initially fetch the complete profile of your finances. You will have to make sure that the credit company and you are in sync with each other. It should not happen that the credit company comes across more debts related to you when they search through your profile.

You can make a file containing all the bills for the last three months including the interest rates, service charges and the balance that remains after all such deductions take place. If you take all these papers and documents with you to your first meeting, it will save a lot of time and you’ll be spared with more time.

Get Someone to Speak on Your Behalf

When you are considering a debt negotiation, it will be better if you could hire a debt attorney from your end. A debt attorney will consolidate and make all preparations beforehand that need to be presented to the credit companies.

Get Someone on Your Side

When you are preparing for debt negotiation, you will want to get a debt attorney on your side. An experienced debt attorney will know exactly what information the credit companies will want to see, what kind of concessions the credit companies would be willing to make and how to talk to a credit company representative to get the results you want.

A debt settlement is a sensitive negotiation that is taking place between you and the credit company. In this settlement, you ask the credit company to lower the payment rates and come down to a level where you can pay off the debts that you owe. Therefore, a debt settlement firm or an experienced attorney would help you negotiate the terms.

Consequences of Debt Settlement

  • Proof for Debt Settlement: Before you go ahead and relax about your debt settlement, you should have a hard copy from the creditor that states that all your debt has been cleared off. You should obtain an authorized and certified copy that says you have been let off and that your creditor will no longer bother you.
  • Effects on Credit History: Damage of your credit history goes hand in hand when you choose for a debt settlement. If you miss payments on purpose, your credit history will take a hit. Even if you have cleared off all your debts, it will always be called a “settlement” and not considered “paid off.” Though, debt settlement does not leave a scar like filing for bankruptcy does; however, it does sent a message to the creditors you might contact in the future that you had chosen to settle your debts instead of paying them off. You credibility as a borrower is hit here.
  • Opening up new account might help in improving your credit history. However, the accounts that you had put your name down during debt settlement are not accounted here. Those accounts will be considered as closed once you settle your debts. You will have to open some new accounts, and maintain them. For instance, you can opt for credit card accounts from time to time; but, make sure that you clear off the payments before the date of billing.

There are some additional debts that you might have opted for, like – student load, mortgage and even medical bills. However, you should try and pay them on time and on a regular basis till they are paid off. There will be some debts that will be disregarded during debt settlement. But, student loans, alimony and even child support does not come under debt settlement.

Ways To Deal With Debt During Tough Times

If you’re having debt problems

If you are experiencing problems with debt, there are things you can do to ensure yourself of a better financial future. Here are six things you could do to brighten your financial picture regardless of the state of the economy. But do understand that doing a better job of managing debt requires you to change how you think about spending your money and must be open to utilizing the professional and educational resources that are available.

Be ready to make sacrifices

The first and probably most essential step if you’re stressed by credit card debt is to determine where you can make spending cuts. You will have to look at what luxuries you could give up and your decision-making process, especially if you feel you’ve been making bad decisions.

Learn how to do things differently

You’ve probably heard the old saying, “if you keep doing what you’re doing, you’ll keep getting what you’re getting”. You will need to learn how to change your habits to get out of debt, which means changing the way you approach your finances. You must stop overspending as you did in the past

Take advantage of the financial tools now available

There are a number of great money management tools available either as apps you can use on your smart phone or tablet or as software for your computer. As an example of these the very popular Mint.com could help you develop a budget, keep track of your spending, monitor your investments and will even send you an alert if it finds a financial product that’s better or cheaper than one you’re currently using. Websites such as InCharge.org offer a myriad of educational materials and interactive tools including home budgeting calculators and even financial games where you can have fun while you’re learning to make better decisions.

Always pay on time

You’ve undoubtedly heard many times how important it is to pay on time but this cannot be over stated. It is definitely in the top five things you can do to have a better financial future. If you’re constantly paying over-limit charges and late fees, you’re spending money you shouldn’t be spending.

Do it now

How many times have you decided to do something about your finances but then just kept putting it off and did nothing? You need to create a budget and a spending plan today and start following them. Otherwise, you’ll just continue spending too much and never get your debt under control.

Aftermath of Debt Settlement

Definitely, the future will look a whole lot better now. That is for certain. The elimination of debt is one thing that you will really enjoy. But before you can wallow in that relief, the work is not yet over.

Before you go out and celebrate, you need to make sure you have in your hands the black and white copy from the creditor that certifies your debt had been written off. Get a written and authenticated copy that certifies your debts had been forgiven and you should no longer be bothered by your creditor for it. Some people receive collection notices even after a debt had been settled. This is the proof that you will show them so they will no longer communicate with you about this particular debt.

Debt settlement also damages your credit history. Since it requires you to miss payments deliberately, your credit score will definitely take a hit. Not only that, even after you have paid off your debts, it will be labeled as “settled” and not paid off. While that is not as damaging as a bankruptcy taint on your credit history, it still sends a message to future lenders that at one point, you had to settle your debts. It shows your credibility as a borrower.

There is nothing that you can do about that but after the settlement, it is a must that you work on your credit score to increase it. Next to bankruptcy, this is the debt relief program that has the most impact on your score. To help increase this rating, you need to keep some accounts open. Of course, this does not include the accounts that you enrolled in a debt settlement program. That will certainly be closed. But if you have other credit accounts, keep them open. Use the open credit card accounts occasionally but make sure that you have the cash on hand to pay for it in full once the billing statement arrives.

If you have current debts that has yet to be settled, like your mortgage, medical bill or student loan, you should try to pay for them regularly. Since you have had a few debts written off through debt settlement, you should be able to finance the remaining with more funds. You may have had to miss payments as you were going through the debt settlement program for the other credits that you owe. Now is the time to get yourself back on track.

It will also help your case to open a savings account. Since your credit score basically shouts how lousy you are with money, it is time to reverse that by proving that you have mended your ways. And what is the best way to show people you are financially capable and responsible now? By building up your savings. When you have a sizable amount on your savings account, your credit score will reflect that as well.