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Post-Holiday Debt Settlement
The winter blues are only made worse by the credit card
bills that pile up from holiday shopping. Post-holiday debt settlement can be
Who Should Consider Settlement?
If you over-extended yourself in gift-buying and
celebrating the holidays, and you put all of those purchases and fun on your
credit cards, you begin to receive the bills in late December or January. The
minimum payments on these cards are now to the point at which they are straining
your budget beyond your ability to pay. What to do? There are a number of
options, none of which is completely pleasant, but your goal is to choose the
least painful. Debt consolidation is certainly an option, in which you obtain
one large loan to payoff all of the debt, with a payment lower than the combined
total of the former debts combined. These loans are usually at higher interest
rates, unless you have excellent credit and belong to credit union or can access
equity in your home. Before you consolidate, it might be smart to attempt debt
settlement with your creditors, reducing the loan amount by a significant
percentage before you think about a consolidation loan.
How Debt Settlement Works
First, you cannot consider debt settlement negotiation
until you are 60-90 days behind in your payments. No creditor will think about
negotiating a reduction if you are not in arrears and you are not late or
missing payments with other creditors as well. So, if you are going to go
through the debt settlement process, you will have to resign yourself to several
negative hits to your credit score for the short-term. But the bigger issue
right now is getting the settlement.
Second, you must decide if you have the stamina and the
assertiveness to conduct this process yourself. If you are generally aggressive
and able to press your case effectively, you may be able to do this personally,
provided you educate yourself in the process and learn the tactics necessary to
get the best possible deal.
Avoid Any Statements about Possible Extra Income
Do not tell creditors that you will be receiving a tax
refund or any other extra money in the near future. They have no right to know
this. In fact, if you file your taxes on time, you will have probably already
received your refund by the time you are in the settlement process. It would be
a good idea to tuck that refund away, because, once the settlement is reached,
you will still owe your creditors.
Get Professional Help if You Need It
If you have any doubt about your ability to negotiate
settlements on your own, by all means get professional help. There will be fees
involved, but the amount you save will be worth the better settlement amount you
will get. Professional debt settlers can get through the process more
effectively and more quickly, so do not be afraid to use them.
A Final Word
Once you obtain your settlements and the debt is finally
paid off, take a good long look at how you are approaching the holidays.
Try starting a holiday budget. You
need to avoid repeating the same mistakes, because your credit will continually
suffer, and you will reach a point at which no one will be willing to take a
risk on you.