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If your financial issues cause you anxiety, depression or insomnia, deal with them as quickly as possible so they don't prevent you from getting your finances in order. Check solutions for anxiety, depression, and insomnia.
Debt settlement is one of the last options for getting rid of your debt as it will seriously damage your credit score. But, sometimes it is the best option for you. Basically, your creditors and you agree that you will pay a certain percentage of your debt and it will count as if you repaid your entire debt.
Before using this option, talk to your credit counselor to see if this is the best option for you.
It's not the most pleasant thing to do, but it certainly beats getting a high-interest loan from a bank or credit card company. Explain your situation to your friends and family and if needed, make an official agreement, with notary public present, so the person who lends you the money knows you are serious about repaying your debt to them. If needed, offer a collateral.
When talking to an agent from a collection agency, it's easy to get upset and say things that could hurt you later. When talking to an agent, remain calm and don't say anything that could compromise you. Keep conversations as brief as possible.
Even though it is illegal, some creditors won't hesitate to inflate your debt to increase their profit. When a collection agency sends you a debt, carefully examine it to see if it really is the amount you owe. If the amount is bigger than it should be, you have a right to dispute it and the collection agency handling your debt is required to obtain a proof that you owe as much as it says.
If you don't dispute your debt in a certain number of days (usually 30), it is assumed that the debt is valid.
Ask for a proof that you actually owe to a certain collection agency
There are many con artists out there who will pretend their collection agency obtained your debt and that you owe them a certain amount of money. Never ever pay anything to any collection agency until they prove you that they really are in a possession of your debt. Until they prove it, you are not obliged to pay them, regardless of what they say.
Employees of a collection agency that handles your debt will often be unpleasant and downright rude. Sometimes they will even make various threats in an effort to get you to pay. Stand your ground and don't let it get to you. Visit www.ftc.gov to learn about what is legal and what isn't when dealing with collection agencies.
If they break the law in any way, report them immediately.
Ask for your debt to be reduced or at least for an option to pay in monthly rates (without interest, if possible). Often, collection agencies will accept such proposal. They want their money as soon as possible and always try to avoid the hassle of going to court.
Whatever agreement you reach, makes sure it is in writing. And carefully examine it before accepting.
Depending on the laws of the country you live in, debts can get outdated and no longer valid. In such case, you are no longer responsible to repay this debt. So before acknowledging any debt, make sure it is still valid.