Many individuals have found themselves in a situation where they have accrued too much debt. Sometimes the debt increases substantially due to over the limit fees and late fees. This can not only make it extremely difficult to pay the debt down, but it can have a negative impact on your credit score. There eventually comes a time when your debt must be reduced. There are steps that can be taken to help lower the amount owed.
Paying Off Past Due Debts First
One of the most efficient ways to lower your debt while raising your credit score is to pay off any balances that are past due. All delinquent accounts must regain a positive balance, and past due balances must be paid first. This will additionally eliminate over the limit fees. You can also call your credit card company because they will sometimes work with you on negotiating a settlement for any past due balances. Since your creditor wants the account settled, there is always a possibility they will accept a much lower amount than you actually owe.
It is important to ensure you receive the negotiation terms you settled on with your creditor in writing prior to sending in any payment. It is a good idea to have proof the creditor has agreed to accept a lower amount. Your written confirmation should clearly explain the exact details of the negotiation and settlement.
If the settlement is extremely large, you may want to contact a lawyer or debt expert such as Nationwide Debt Reduction Services. They will be aware of any tax or legal issues in your state and will have a full understanding of the language used by your creditor in the agreement. The paperwork should state the account has been paid, not paid for a lesser amount. There are additional specific loans that will not appear on your credit report provided your payments are made on time.
The Credit Card With The Highest Interest Rate
As the balance on your credit card bill increases so does your payment. If you have multiple credit cards, paying all the minimum payments due on time can be difficult. When the payment is late there is an additional fee added, and this only increases the balance even more.
Combining all the balances on one card with a larger limit will generally decrease the total payment due, and it is easier to pay off one card than multiple balances. Whenever possible, pay more than the minimum balance to decrease the payments and balance even faster. It is imperative the cards with the highest interest rates is paid first.
The Credit Card Utilization
Paying off the smallest of your debts will enable you to pay a larger amount on your higher balances. Having too many credit cards or sources of debt makes it difficult to remain current on your payments, and it can damage your credit score. Your credit card utilization should be a maximum of thirty percent. This will help you to regain control of your finances. If you have too many debts, are unable to pay off any of them, and are unable to make the monthly payments, the best option is a debt reduction service. Nationwide Debt Reduction Services works directly with creditors to assist clients in their financial situations and are an excellent option to get out of debt.
Paying Off Installment Loans
Sometimes the issue is not with credit cards, but with installment loans. At Nationwide Debt Reduction Services this can be anything from a new car to a new HVAC system for your home. It may be possible to work with the company that gave you the loan, but this may hinge on how long the loan has been in existence. If the loan is only a few months old, you have not yet established yourself with the company, and they may be unwilling or unable to work with you. If you have been paying on the loan for several years, your chances of extending the loan and reducing your payment are much better. Depending on the size of the loan, when it was issued, and the expected payoff date, you may be able to lower your payment enough to make it affordable.
Asking for Help
Regardless of what type of debt you have, if the situation is already out of control, you will probably require assistance. Once the balances on credit cards have exceeded the limits, and are consistently rising due to additional fees, it is difficult to handle the situation alone. If the situation is not promptly addressed, it will get out of control, and creditors will be calling you at home to demand payment. There are agencies trained to help people get out of debt, and they are very good at what they do.