Do you have more debt than you can keep track of? Have you grown to expect your daily phone call from debt collectors?
The good news is that you’re not alone. In fact, the average American now has around $38,000 in personal debt.
Credit companies will constantly call, even when both of you know it’s not helping you make your payments.
Here’s how to deal with debt collectors when you can’t pay.
1. Budget Your Way to Freedom
Budgeting when you’re thousands of dollars in debt could seem like trying to dig out a house foundation with a kiddie shovel at first. Yet if you develop a strict budget and stick to it, you may be surprised at how quickly you see your debt begin to dwindle.
Each month, figure out where you could save money. Put it aside and use it to pay down your bills.
You can save a lot of money by brewing your coffee at home each morning or looking for deals at consignment shops. Clip coupons or sign up for digital deals and plan your meals around sales at the grocery store.
A little ingenuity goes a long way when it comes to spending. And you’ll have healthier spending habits even when you’re in a better financial situation.
Create a budget where you list your income in one column and your expenses in another. You can use something as simple as an Excel spreadsheet.
Make sure you’re basic needs are covered, including your rent or mortgage and utilities. You should also include your transportation costs for commuting, as well as your food bill.
Some of these expenses can’t be changed unless you move or changed jobs. Yet some, such as groceries and entertainment, can get pared down with a little creativity.
Often, the most challenging part of a budget is sticking with it. If, for example, you want to spend less than $700 for your family to eat each month, you’re going to have to plan your meals carefully and stay under your limit every time you shop. It will, however, be well worth the effort once you see what you can set aside each month to pay down your debt.
2. Get a Second Job
We all need our downtime, but increasing your income by getting additional work may be the temporary solution you need to help you eliminate debt for good.
Apply for an extra position during your off-hours, and use the majority of what you earn to pay off your debt and bring your credit score back up. You could babysit or wait tables on the weekends.
Think about what you love to do and how you can use your gifts. Most importantly, remember that you won’t be working extra hours forever.
In today’s remote learning world, you don’t need to leave the house to find employment. This is particularly helpful for those with families or other caretaking obligations.
You could perform tasks like bookkeeping or customer service from home. Just make sure the job is legitimate by doing a little research before you sign up. Beware of companies that ask for too much personal information too early on.
Once you’ve secured extra employment, be sure you don’t increase your spending! There will be plenty of time to improve your lifestyle later on. For now, remember that you’re goal is to get free from debt so you can start living better.
3. Consider Debt Relief
National Debt Relief can help negotiate with creditors on your behalf and help you get out of debt without loans or bankruptcy. Before working with them, however, you should know about National Debt Relief pros and cons.
Debt relief creditors can help you consolidate debt, but they certainly aren’t for everyone. It can take some time to reach a settlement, and your credit score could get seriously damaged. And penalties could continue to add up.
Make sure you check with a local consumer protection agency before working with a relief company. They should be licensed. You’ll also want to make sure there are no complaints against them before you trust your debt repayment to them.
4. Don’t Pick Up the Phone at Work
It’s lawful for you to tell a debt collector that your employer doesn’t allow phone calls. According to the Fair Debt Collection Practices Act, they must stop calling you. Debt collection companies cannot contact you after 8:00 am or before 9:00 pm unless you agree to it.
The Act also prohibits debt collectors to speak with anyone besides you and your spouse about your debts. They are not allowed to use the phone to pester you, or to misrepresent what you actually owe. Your debt collector is also forbidden from charging interest fees on top of what you already owe.
5. Debt Collectors Aren’t That Scary
Some debt collectors are trained to sound threatening so you’ll feel afraid enough to make an immediate payment. They may threaten to make notes in their records, but keep in mind that your credit history is already on file.
If you speak to your debt collectors and make an arrangement to pay, they’ll be less likely to hassle you.
How to Deal With Debt Collectors When You Can’t Pay
If you’re wondering how to deal with debt collectors when you can’t pay, start by figuring out an economically sound plan for paying off some debt each month. Then speak to your debt collectors and come up with a solution. You’ll be on your way toward financial freedom in no time!
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