3
prevents the creditor from contacting you again. This is all by law. No matter your ethical or moral view on paying back your debt, the law protects you from a lifetime of harassment. If you’re in a debt situation where this makes sense, please check with your state laws to uncover the exact time limits. Look up debt online at your state’s website (usually the state’s initials followed by “.gov” – for example, www.md.gov for Maryland) for specifics. If you don’t feel it’s right to renege on your debt, but you still face big debt problems, you can do two other things... NEGOTIATE WITH YOUR CREDITOR. If your circumstances are truly dire – no job, no assets, or no income – you can document this fact. Put together a financial statement, including a balance sheet and income statement. Then have it verified by someone reputable who knows your financial circumstances – a tax preparer, bank officer, etc. Share that with your creditor and explain the likely outcome is bankruptcy. The creditor would get nothing or very little if that happened. Instead, suggest a 50%-or-more cut in the amount of debt you owe. If things have come to this point, you might also have fees and penalties that were tacked on in past statements. Ask for those to be removed, too. Once the company sees you have no income or a negative net worth (your debt is greater than your assets), it may be willing to negotiate a deal.
And one other tip: Be sure to ask it to remove any bad marks on your credit report once you settle, even the one that says you settled for less than what was owed. The final thing to do – and do it right away – is to ASK THE CREDITOR TO LOWER THE INTEREST RATE ON YOUR CARD. A few years ago, I missed a payment with my American Express card due to a travel snafu. My next statement showed the interest rate had jumped up to 33%. I quickly called and told them to change it back to the old interest rate or cancel the card. They lowered the interest right back down. And you can easily do the same thing I did. If you have trouble, be nice and call back until you find the right supervisor to help you make things better. If you’re like the average American with a balance of $7,500, lowering the interest rate by 4%-5% can easily save you a couple hundred dollars a year. And look out for deals of 0% with a balance transfer. Just be sure to pay those off regularly – otherwise, the rate pops up again if you’re late or miss a payment. Finally, if you haven’t done it already, remember to get your free credit report from one of the three credit-reporting services. By law, you can get one from each company each year. I rotate through each of them since they each have slightly different information in their databases. You can get the report online from www.AnnualCreditReport.com .
American Consequences | 25
Made with FlippingBook - Online Brochure Maker