Happy New Year! When this time of year rolls around I always tend look back on the prior year and ask myself if things are any different now than they were a year ago. Did I meet my goals? Have I improved my and my family’s situation? As with many of us I find that things aren’t that different and much of my situation is largely unchanged.
Of all challenges dealing with a large debt problem can be one of the most difficult – particularly in today’s world. In times past most creditors would work with you when you encountered hard times. They might be willing to reduce payments or give you a couple of months off.
Not so anymore. I rarely hear of any large banks or lenders being willing to work with people. In this age of debt buyers we see most credit card companies handle their own collections for 4-6 months and then sell it off to a debt buying company who will eventually sue you.
The short of it is, you can’t simply ignore your debt problem. It may go a way for a while but it will come back – and often at the worst possible time. The time is now to finally deal with your debt problem. And next year on January 1, 2015 when you look back, things will finally be different.
Here are three ways you can take control of your debt in 2014:
#1 – Get a Copy of Your Credit Report
The best place to start your battle against debt is to get a copy of your credit report from each of the three main credit bureaus – Equifax, Transunion, and Experian. If you go to each of the credit bureaus you can order a copy of your credit report and get your score but it will require you to pay a fee – usually $15-$30.
You can also get a free copy of your credit once per year at www.annualcreditreport.com . Note, this credit report will have a listing of all of your creditors but you will not get your credit score unless you pay for it.
Things to Look for on Your Credit Report
Once you get a copy of your credit report you need to look at the accounts that are derogatory or past due. It is important to look for things like errors in the recording of your payments. Also, if you have old credit cards that you haven’t paid on in a long time look to see if the debt has been picked up by a debt buyer. The most common debt buyers are companies like Midland Funding, Portfolio Recovery, and Unifund.
If a debt buyer is showing up on your credit report there is a good chance that you will end up getting sued. The debt buyers typically purchase the debt and then file a lawsuit a short time later.
Your credit report will give you a good starting point to know what your debts are, how much is owed, and who currently owns the debt.
#2 – Consider Settlement of Your Debts
If you only have a few accounts that are delinquent you may consider settling the account. In most cases debt settlement will be most successful if you can pay a lump sum within a fairly short period of time (usually less than 30 days).
Depending on how old the debt is, how much is owed, and who owns it you may be able to settle your debts anywhere from 30% up to 65% of what is owed. If you need to make payments over time expect to pay more than you will if you can pay it all immediately.
#3- Consider Filing Bankruptcy
No one wants to file for bankruptcy. But too often I see families that suffer under a heavy debt load for years when they could have filed a bankruptcy, eliminated the debt, and rehabilitated their credit in a relatively short period of time.
If you are struggling with more than $20,000 of credit card debt, and haven’t made a dent in that balance in years, bankruptcy is likely going to be a good option. You need to take action. Bankruptcy has its drawbacks to be sure, but if you do nothing you will wake up 5 years from now in even more debt and wishing you would have bitten the bullet and filed bankruptcy years prior.
Good luck on your battle against your debt. It is not easy and it is not completely painless. But you can overcome your debt problems. Let’s get started…