How to Reduce Debt

According to Dave Ramsey they will only agree to reduce the debt if they think you are unable to make the payments or will be unable to repay the full debt. Usually it is a debt that hasn't been paid in years and has a ton of "late fees". In a way it is like going back to the original debt that was owed.

P. I don't know about paying the cc co off although I have heard of that. Here is a good one to call:

Dave Ramsey's Office
1749 Mallory Ln Ste 100, Brentwood, TN
###-###-####

I actually heard this on his radio show. Call and talk to him or his office. They should be able to help you.

I completely recommend the book 'Pay it Down' by Jean Chatzky. I originally saw her on Oprah, but her book is really easy to read, skim through the pages you need/want, etc. Best of luck to you. :) And great job getting a hold on things!

Yes, I had too much fun with my credit card a few years ago. I went to Consumer Credit Counseling Service and they were wonderful. Note: this is offered thru the United Way. When I used it, it was a free service. Go to 2 different sites for further info.
UnitedWay.org or http://clarkhoward.com/shownotes/category/7/40/ClarkHowar...

contact me if you have further questions.

If it's Capital One, don't bother. They would love nothing more than to take you to the cleaners. We did it about 4 years ago, but it took my husband getting laid off for them to cooperate. If you have a serious financial hardship, they may consider it. You also will have to pay that agreed to amount in one lump sum. They will not drop the amount and let you continue to make payments. Also realize that it will hurt your credit tremendously and after 4 years of faithfulness in our finances, our credit score still stinks. If they agree to it, be sure to have them send you a letter stating they have agreed to the pay off and would not attempt to come after you later. Trust me, they can try to come after you later, but if you have it in writing that they won't, they can't. That is very important.

If you haven't heard of Dave Ramsey, I would highly recommend you check out his web site. He's on the radio in several states (not sure where you are). www.daveramsey.com He has a fantastic course on become debt free and staying that way. But he also teaches how to build wealth and be responsible - making your money behave. Good luck to you.

P.,

I work in a collections department in a bank and have extensive knowledge of settlements. If your credit is already in trouble that may be the way to go and it does work. However, it will show up on your credit report as a settlement which will effect your credit score. Also, you will have to pay taxes on the amount you don't pay. They will send you a W-9 (I think that is the one)that you will have to declare as income. If you are in financial trouble and don't want to go that route ther are some non-profit Consumer Credit Counseling Agencies that will work with your creditors to get your interest rates lowered along with your payments. Do not work with a debt settlement company!! Most banks don't work with them and it will damage or further damage your credit because their philosophy is just don't pay and the bank will settle for less. This may be true but after you do that good luck getting a loan and when you are finished with them it will take you years to re-establish your credit. I am not sure if you have any credit card companies calling you because you didn't specify if you are past due on these accounts but if you do and the phone calls are causing anxiety all you have to do is send the credit card companies a Cease and Desit letter. Just include your name and account number asking them to cease and desist all communication other then mail and sign it. I hope this helps. Feel free to ask me any questions you might have.

It will show on your credit as not paid in full, not sure the technical term. It is better than not paying at all and will show closed. Your best bet would be to gather as much money as you can and offer it to them b/c they may want it in full and not give you any more time to make payments. It depends how long it has been outstanding and how much you owe. If you can take out a personal loan, pay it off in full. If your credit is already messed, take the lower amount BUT you HAVE to get it in writing as to what they will accept, otherwise they will lie! They will tell you that can pay one amount and then months or years later they will come after you again. GET IT IN WRITING! You do NOT give them access to your account and do NOT send them any money unless they give you the deal they are telling you in writing. Send certified letter with your payment of a money order or check. Also a Dave Ramsey fan, you ought to check him out! 99.7 1-4pm in Nashville.

W.

I've done this before... do NOT... I repeat DO NOT CLOSE THE ACCOUNT!

Call them and work out a deal, it's not necessary to pay someone to do this for you. Save your money and be gutsy!!!

With the cards I've had and paid off here's what I've found... you can settle a MUCH lower figure when you tell them... "I want to pay off this card today, IN FULL, so I need you to drop the finance charges... give me a figure and I'll see if it's to my liking." [have a fair figure in mind before you phone].

Note: if you've owed them money for a long time and have not paid them a cent or just a teeniest amount irregularly be REAL gutsy! I've done this on behalf of people I know.

For example, one person owed $1,200 for years... while I spoke to the collections dept. of their credit card holder I behaved as if "I" held all the cards. Meaning I dickered with them.

Do NOT tell your story to them, do NOT beat around the bush. Just get straight to the point...

I started out by saying... "I'd like to see this get resolved today. How much does Ms.___ owe you right now?" pause ..."ok, that's the figure I see on her last statement. I plan on paying this account off entirely today. What's the price?"

The woman said they'd go down to $1,000... to which I said.. "HA! $1,000... I don't think so... I'll give you $300 right now... do we have a deal?" Don't be afraid to be gutsy!

She asked me to hold while she checked with her supervisor. She came back with a $800 deal. To which I said, "naaah, that's just not even close. Come back to me with a significantly lower figure, otherwise I'm just going to get off the phone without this ever being resolved and before I change my mind about paying this off."

We agreed on $500. And the $500 was paid on the spot - they'll ONLY make a great deal like that if you plan on paying then then and there - but you've gotta be gutsy.

In order to get the lowest possible figure from them you will have to be prepared to make that full payment right there on the spot [pay over the phone]. No, they won't let you mail in a check/MO at a later date at your convenience.

Afterwards... and this is what the "Smart Woman" will do... once a month buy $20 worth of groceries and pay the card off every single month. Never use the card for anything else at all - you want to use it as a tool that works for you rather than against you.

If you cannot afford $20, then make a $5 or $10 purchase on it per month (this is only AFTER you have a zero balance)... do you know what will happen as a result of doing that... your FICO score is going to go way up over time. So, if you have a shabby credit score you will be able to whip that baby right back into shape - easily and all by yourself.

Notes on "closing a credit card"

When you 'close' a credit card account it counts as points "against" you on your FICO score, meaning it will drive your score down. A FICO score is what everyone uses these days to determine: a.) how high or low a risk you are, b.) how much they will charge you in interest, c.) it combined with your income determines how high a credit line a lending institution will give you.

You do want to maintain a good credit score/rating as this will be what institutions, homes/apartments who do 'credit checks', and even some types of jobs, - they will look at this when they do a credit report.

A FICO score is what determines how much a lending institution will charge you in interest. When your FICO score is low you are charged a higher interest rate. The higher your FICO the lower your interest.

FICO scores of 700 or higher mean you get a super low interest rate (let's say when you buy a home)

FICO scores of 600 or less... mean you'll be paying 20% or higher interest rates, and the only lending institution who will give you a loan is... well, one of those institutions who are folding as we speak and you'll be stuck with a 'balloon' and shortly thereafter file bankruptcy.

A tip for those looking to buy a house: ONLY take a loan that has a fixed interest rate for the duration of the loan... which by the way should only be for a max of 15 years. If you can't easily afford a 15 year mortgage on the income you have right now then you need to look for a less expensive house. Don't let your lender or real estate agent get you to go your max... it will make your life hell, especially with the economic climate we're looking at right now.

Anyway...

Suze Orman is the best when it comes to all types of financial advice http://suzeorman.com

I'm thinking that Suze may even be a regular on Oprah these days??? If she is, I HIGHLY recommend tuning in.

Suze also has her own TV program, see listings here
http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=MD01...

Her books are widely available and I highly recommend picking up one. You can learn so much from simply watching her show or reading her books - a very inexpensive way to learn how to get a grip on your finances and plan ahead.

I hope this helps... I want to see all of you happy, wealthly and SMART : )

ALSO.... for those who either pay their credit card off each month or if you carry a small balance and pay more than the minimum due... call your credit card once or twice a year and say... "I want a lower interest rate than what I currently have." Some years they might not lower it... but over time they will. And when you do this, insist that it be a "FIXED" rate. You "can" get your interest rate down to 7 - 10%... if you're good about paying and if you keep at it. Like I said... be gutsy!

Go to Daveramsey.com. Listen to him on the radio on 1030am from 3-5 o'clock. Get into a class. If your in the Raleigh area Lifepointe church has classes and a once a month meeting. Dave Ramsey is the best thing that ever happened to us. TRUST ME!! Everyone should be on the daveramsey program.

I worked for a credit card company in the past, and yes - it can be done. I am sure each credit card company is different, but it doesn't hurt to ask - most companies will work with you and lower your interest rate. It might be more beneficial for you to talk to a credit counselor, however. If you have debt with more than one credit card company they can help you work with all of them. Just keep in mind that lowering your interest rate on your own or through working with a credit counseling company both lower your credit score.

DaveRamsey.com DEFINITELY!!! Go through financial peace university. If you have to pay for it, it is worth it. If you don't, even better. There are churches that sponsor the program and you can get into a class for cheap to free. That is what we did.

Dave has a whole lesson that covers this very subject... Yes, you can settle your account for less. I did it earlier this year. Yes, you have to pay taxes on it, but it is worth it to get it out of your life. Yes, it is crucial to get it in writing that you are settling your account in full for a lump sum. Do not send the check without getting that in writing. Also send the check (I think we got a cashier's check from the bank), write a letter reiterating that this money is a settlement payment in a certified letter receipt requested. Do this so you have proof that you sent it and keep all of the paperwork together in a safe place FOREVER.

Dave also says NOT TO send a cease and desist letter to credit card companies because that can cause a whole other set of problems. I know that someone said that and was probably meaning well, but some cc companies will take that to mean that you are not willing to work with them to resolve the problem and take drastic measures. Please, please, for your sake, do not do that.

Please email me if you have questions. I would love to help you.

I don't know about lowering the amount but you can always ask for a lower interest rate. If they say no just tell them you got a 0% offer in the mail and you're considering a balance transfer. Most of them will want to keep your business. If they still say no, shop around for a 0% rate, transfer the balance and pay off as much as you can. The key of course is to not charge anything else until you pay this off.

Definately - I did about 4 weeks ago. I had about 3,300.00 worth of two credit cards with the same company and I ended up only having to pay 1175.00 for both (they orginally wanted 1,500.00). The main thing I can tell you is DON'T CALL until you have around 30-50% of the debt available to pay them BEFORE you call them so you can negotiate. They will expect payment right then. In my case they did two checks over the phone. After 30 days you call the credit bureaus and make sure they have reported it as being paid off. If not, you contact the company immediately and tell them that you will report their company to the credit bureaus and the BBB if they do not. Hope it helps - it did me.

I just got a different credit card with no interest and transfered the balance. Then hopefully you can pay them off with no interest for a certain amount of time. Once you get it down if the interest starts up...open another one..just make sure to close out the previous accounts. It helped me get my credit cards reduced quickly!

Yes, you can call them and they will work with you. I called one company, they set me up on a 5 year repayment plan, dropped the rate to 1%, AND closed the account.....not to be used ever again is my understanding. It has worked well for me thus far. You cannot ever be late with your payments, though, or they will shoop up the interest rate to 20 or more percent. Sometimes you need to be persistent and ask for someone that will really help you. Dave Ramsey classes are great as well to help you with your future financial plans! Good luck and I hope this helps.

I definitely recommend to get in touch with someone that helped me. Her name is Margie and she is an incredible expert with credit repair and works right here in the triangle. Success rate is almost 100%. Her email is ____@____.com Luck and God bless!

If I remember right, you have to have already been delinquent for them to consider allowing you to pay it off at a lower balance. Some companies will take off only a small amount, some slightly bigger. But by the time you go through the process for them to do this your credit is tainted from the delinquent payments. Just call the companies and talk with someone. They can tell you their rules. And the same rules do not apply to all companies. Each company has their own policy on this issue.

A while ago my husband and I were in a bad situation with debt. We ended up joining a debt management group out of desperation. Normally I am VERY suspicious of these things, but this helped us out of our jam and nothing was reported on our credit report. The name of the company is Budget Right Debt Management. They took 4 of my credit cards and worked with the companies to lower all my interest rates (one of them they took from 29% to 0%!!) and stop the fees from piling up. All we had to do was make payments on time every month and agree to cancel all the credit cards. It was the solution that saved our financial lives! I'm sure you can google the name to get the website and check it out for yourself.

Feel free to contact me if you want to know more about it. Good luck!

.

I've never done this myself but Suze Orman and Dave Ramsey are 2 "financial guru's" that suggest doing this. check out their websites, I'm sure you'll find lots of valuable info on there...
http://www.daveramsey.com/
http://www.suzeorman.com/

p.s. We did Dave Ramsey's "Financial Peace University" and had great success and still live by the principals (we don't follow the program to the T anymore because we changed our financial approach to life and live much better- financially & emotionally!)

Best wishes & God Bless!

If anything, I would keep in touch and tell themyou are a full time student. Sometimes they cansuspend payments. I had to do this and they will work with you. I don't know about reducing the amount.

Work at home Mom to 2 girls, 2 dobies and www.babybootywear.com and I just turned 30

The only problem with doing that is tht your credit report will then say "account paid but settled for less" for every account you do this with. So you may reduce your debt but now your credit looks even worse than before. You may want to go to your local bank or join a credit union since they offer lower APR's than most banks. Apply for a debt consolidation loan with a lower interest rate. This way your credit report shows you have paid off all of your debts and now you even have a new loan that you re paying on time. So instead of hurting your credit you are helping it....

My best friend did that and they worked with her. Well some of them did and some didn't, but doesn't hurt to try. Good Luck.

Tell them that you want a lower interest or you're going to another credit company that provides a lower interest. It does get them the opportunity to lower your payment and stay a customer. Try it, it'll reduce your payments considerably.

Hi P.. Check out www.daveramsey.com. My husband and I are going through his Financial Peace University right now at our church, and it is an amazing outlook on debt. If you are interested in hearing more, feel free to contact me at my email address...

Good luck!

They will not reduce the AMOUNT, but if you call and politely ask them to reduce the INTEREST rate, you will most likely get a yes, if you have been paying your minimum payment on time and regularly. Good luck. It NEVER hurts to ask!!

Check out Dave Ramsey's Financial Peace University. Excellent program. See his website at daveramsey.com about how to handle credit card companies and other good advice.

Yes, it's called settling and that's what your credit report will say too. It's not paying off your debt- it's settling. Which does not look as good on your credit report.

Figure out what you're willing to settle for- it has to be reasonable- and tell them. It's all a negotiation.

To keep your credit score where it is or to get it higher...do what was mentioned below. Swith your card over to a 0% interest for a year or two- whatever the next offer is that comes in the mail. Transfer the entire balance, divide the amount by the months you have to pay at 0%, and get it paid off.

Hey P.,

I'm not able to answer your question about the credit card deal, but I would like to also suggest the Dave Ramsey program (I noticed a couple other ladies also mentioned it). My husband and I are going through the program right now and it is wonderful! Dave Ramsey gives you the steps you need to go through in order to get out of your debt. He really gets you excited about wanting to get rid of it. I would highly recommend going to the website one of the other ladies provided. It is truly a great program. Good luck!

-K.

Hey, I'm a credit counselor (non-profit) and there are many cc companies who will accept a lesser amount. There are a lot of ways to reduce your debt quicker than you think. You have to know what to say and who to talk to. You have to be firm and offer a ligitament amount. I usually do not reccommend using a credit consolidation company. Please send me a messege if you have any questions.