Steps for Settling Debt

If you are struggling with high levels of credit card and other high-interest debt, it can be all but impossible to get out from under that burden without renegotiating the terms of your repayment agreement. Fortunately, it is often possible to negotiate more favorable terms with your creditors, since it is in the best interest of those creditors to keep you out of the bankruptcy courts.

Instructions

1

Make a list of all your debts, including the total amount you owe to each creditor and the required monthly payment. Sort the debts according to the interest rates, with the highest interest rates on top. Working with the highest interest rate debt first will allow you to save the most on interest payments.

2

Look up the customer service telephone number for each creditor and contact the creditor with the highest interest rate. Ask to speak to a supervisor immediately, since the rank-and-file customer service representatives will not have the authority needed to change the terms of your repayment or lower your interest rate.

3

Explain your personal financial situation to the creditor as clearly and precisely as you can. A sudden shock like the loss of a job or an unexpected expense can leave many previously financially secure people unable to pay the total amount they owe. The more information you can provide to the supervisor, the better off you can be.

4

Continue to contact each creditor on your list, working backward from the highest interest rate. Be sure to live up to the terms of each payment agreement you enter into, since missing a payment or paying late could cause the entire agreement to be canceled.

5

Contact your bank about a debt consolidation loan if you are unable to negotiate better terms with one or more creditor. Use the funds from the debt consolidation loan to pay off all your debts, then vow to avoid accumulating any additional debt.