Stop spending. Look at what you are paying on extras every month and stop making those purchases. Take-out meals, movie rentals, gourmet foods, cigarettes, these are all unnecessary items that could save you hundreds of dollars per year.
Gather your bills so that you can calculate exactly how much debt you owe. Don’t forget anything. You should collect everything including car loans, medical bills, mortgages, personal loans, school loans, credit cards, furniture loans, store cards, etc.
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If you are not sure of a pay-off amount, call the company and get it before you make a call to a collection agency.
Once you have every bill in front of you, total up the amount that you owe. Don’t estimate, you need exact figures.
On a second sheet of paper, keep a tally of the minimum payments. You will need to know how much money you are spending on this debt every month.
Call your credit card companies and explain your financial struggles. Ask if there is anyway they can lower your interest rate. Keep your cool during this call. They can be frustrating, especially when you know that many companies have received huge sums of money from the federal government. Remember that the staff is only doing what they’ve been told to do.
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Find your most recent paycheck stub or your last year’s tax return. Income is important in calculating what you can afford to pay. Also, get receipts for anything like rental income, alimony, child support, unemployment, disability, pensions, retirement income, lottery winnings, etc.
Take your income receipts and total them to find out exactly how much money you earn each month. It can be helpful to calculate them both before and after taxes so that you can see the difference in take home versus earned pay.
Order a copy of your credit report from Equifax, Experian and TransUnion. You are allowed to access this information free once a year. Look for discrepancies or accounts you are certain you did not open.
If you find anything, report them immediately to each of the credit bureaus. It’s also helpful to file an identity theft complaint with the FBI Cyber Crime division and with your local police.
If your account has been taken over by a collection agency, find out who is currently holding that debt. Ask them to send a debt validation letter for proof that they have been hired to collect the debt. You do not want to send payment to the wrong company, as it can be difficult to get it back.
The debt consolidation agency will need to know whom they must contact once you’ve applied for their help. They need the debt validation letter as proof that this company is entitled to payment.
Create a cheat sheet filled with information that you will need to know when you call a debt consolidation agency. They will ask for your home address, employment information, social security number, date of birth and debt information. Have it on hand so that you are not wasting time hunting it down.
Call the debt consolidation company of your choosing. You may be able to fill out an inquiry online if you don’t mind waiting for a response. Every company has a different response time. Telephone interviews are generally easier and quicker.
When you call a debt consolidation program, be prepared to be on the phone for a while. They will need to enter all of your debt information, any information on repayment arrangements you may have made and what your payment history has been like.
After analyzing your data, your debt consolidation professional will look into how the company can help lower your debt. They’ll work out terms to find a program that works to pay off your bills without taking money set aside for necessities like food, utilities and housing.
Once you’ve decided on a plan, you must follow through. The debt consolidation company will notify your lenders and renegotiate terms.
Make sure you pay on time. Failing to pay your debt consolidation program is not going to help.
Take advantage of the programs your debt consolidator offers. Part of debt counseling involves attending classes in debt management. These classes are free and an important step in remaining debt-free in the future.
Using your newfound money management skills, create a monthly budget and stick to it.