How to Satisfy Your Debts

The bills have piled up and you're overwhelmed by all the money you owe. If you can't keep up, you're not alone. Many Americans fall behind on credit card payments and other bills. Once you fall behind on your bills, debt settlement might work for you. Although professional debt consolidation companies lure consumers with tempting ads of freedom from debt, MSN Money warns that these companies can charge up to 18 percent of the total debt. Consumers can try the same methods used by these companies. If all else fails, you may have to file for bankruptcy.

Instructions

1

Stop paying bills for the accounts you want to satisfy. This might sound counter-intuitive, but most creditors won't negotiate with a debtor until he falls three to six months behind on payments, according to MSN Money.

2

Analyze your budget. You'll need to save money for a settlement, but you should first identify areas where you can cut spending. If necessary, seek professional help to target areas where you can trim your spending. These newfound financial planning skills can help keep you out of future debt.

3

Save for a settlement. A creditor will typically accept a payment of 20 percent to 75 percent of the total amount owed as settlement after negotiations. Since you can't negotiate until you fall three to six months behind, use that time to save money for your settlement.

4

Avoid collections calls. The phone might ring incessantly while you save for your settlement, but your life will be less stressful if you ignore the calls.

5

Get a copy of your credit report to see who has your debt. Your original creditor may have passed it on to a collections agency.

6

Call your creditors or the collection agencies after saving the money for a settlement. Tell them you're on the verge of filing for bankruptcy and that they can either accept a percentage of what you owe or risk getting nothing. Most creditors would rather have you pay a percentage rather than lose the money altogether, according to MSN Money.

7

Persevere. The creditors may speak harshly, but stay calm and remember that many creditors will accept a portion of what you owe. In negotiations, start with a low percentage payment offer, which you can increase through counteroffers. If you don't reach a resolution the first time, you can always call back and try again.