Online Charity Fundraising | Step by Step Guide to Settling Credit Card Debt

Step by Step Guide to Settling Credit Card Debt

Posted on September 30, 2010
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Being in credit card debt can be a very overwhelming experience. People who are in this dreadful situation will look for an escape. They will find debt settlement companies that say they can cut off up to 70% off their debt. These people don’t realize that you can also settle credit card debt on your own.

You shouldn’t try to settle your debts haphazardly though. This is why I have created this step by step approach to debt settlement.

1.    Set a budget

Before you can even think about settling credit card debt, you need to save a good amount of money. This means you will need to make some serious lifestyle adjustments. No more eating out at restaurant. No more clubbing. No more new clothes that you do not need.

Create a list of your income and your expenses. Cross off all listed expenses that you could do without. For the coming months you will only be allowed to spend money on the items that haven’t been crossed off.

2.    Stop paying

Your creditors won’t go for a debt settlement if you keep paying them. Why would they? You need to make them believe you do not have enough money to pay them. They will have to be afraid that you may file for bankruptcy.

When you stop paying your creditors, you will get many phone calls from them. A lot of sources would say to ignore them. I advise you not to. Answer the phone, and simply tell them you don’t have the money. Don’t give in to their pleas that you must at least have some money.

3.    Contact your creditors

Send a letter to your creditors explaining that you’re not able to pay them, and that you wish to work out something with them. Make sure the letter is registered. Save all letters that you get from them. This way you will have evidence that you tried to work something out with them, when they threaten to sue you. Tell them you have saved all correspondence, and they will be less likely to.

4.    Negotiate

After a minimum of 6 months, you can start to negotiate a debt settlement. Don’t try to do it sooner than this, because the chances are slim that the creditors will go for it. After they have agreed to a debt settlement, ask them to send you a letter that states the debt was fully paid.

If you follow the steps outlined in this article, you will be able to clear debt through debt settlement. It won’t be easy. It will be a stressful period for you. But it can be done.

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