1. Take an honest look at your finances. When you feel like you’re drowning in bills, it’s hard to keep
up with what is coming in, what is going out, and how quickly things are going to hit a point of no
return. This is partially because you’re working incredibly hard to turn things around and have no
extra time to pour over the books. But it’s also because it’s incredibly disheartening to know that
you’re sinking and many times the thought of knowing the full picture is terrifying. But you cannot
make an action plan unless you take the time to figure out exactly where you stand. Know payment
dates, payment methods, what’s late, how late, how much interest has accrued. And know not only
how much you have in the bank but how much you can realistically expect to earn and receive.
2. Understand the different types of debt. Not all debts are created equal. And what you pay first
should be decided with a great deal of thought. Debts like employee wages should arguably be the
first out of available funds. Credit cards personally guaranteed should be toward the top of the list as
well. Then you have secured and unsecured debt. Knowing the difference is important for the next tip.
When a debt is secured, you’ve put up something as collateral. Something the bank can take. So you
should understand all your loans and prioritize each accordingly. Unsecured debt isn’t linked to any of
your property and should be the lowest on the totem pole when you’re in trouble.
3. Negotiate with your creditors. Ignoring the problem will not make it go away. And creditors have a
vested interest in working out a payment plan with you or agreeing to settle for a lower amount.
They’re faced with either getting nothing back, repossessing property that has only depreciated since
you bought it, or working with you to find a solution. Approach your creditors honestly and
reasonably. They may recognize that they’re better off agreeing to a settlement or payment plan, but
that doesn’t mean they will bend over backwards to make your life easier. Be open about your
situation, finances, and outstanding debt and put serious consideration into what they offer. If it’s still
not doable, go back to them with a counteroffer. But, again, make it reasonable. Find middle ground.
4. Thoroughly research debt-solution companies. There are several options out there to help with the
settlement process. Negotiating isn’t always easy. Some creditors are more flexible and understanding
than others. But there are times that using a company to negotiate on your behalf is necessary to find a
solution that truly works for you. When you consider bringing one of these companies into the mix, do
your research. Look for BBB-accreditation that many, such as National Debt Relief, have. Look to
their BBB grades, comments, etc. There are many reputable companies that can really make an impact
for you. Take the time to read up on them and you’ll rest easier knowing you can trust them with your finances.
