How To Settle Debt

Step 1
Put together all related documents and bills you have and make a note of the income and relative outflow of money. This will give you a fair idea of how much you have on hand each month and hence how much to repay.

Step 2

Pay off your credit cards get rid of them until you get yourself out of debt. They usually have the highest interest rates and charge several additional fees and surcharges. Use only cash and personal checks to make your payments.

Step 3

Check out other possibilities of repayment by banking on your savings, tax refunds or refinancing over the already existing debt. You should review your current debts and gain insight into how much of a monthly or term installment you can afford.

Step 4

Try to get your debt as low as possible by negotiating with your creditors. Most creditors would like to get most if not all of their money back. If they had to forgo some of their loan, they are willing to do so if you promise to return their money. Call your creditors or hire someone to negotiate with the creditors on your behalf.

Step 5

Consider debt consolidation which allows you to combine all of your debts into one bill and get a single loan to pay them off, which is normally at lower rates of interest and longer payback tenures.

Step 6

Understand that secured debts are the ones that attach some kind of mortgage with it usually the item being purchased or other property of value. In this case, the creditor will automatically seize it to settle the debt.

Step7

Start building emergency savings for future problems. Ideally, you should have enough money in your savings to help you live comfortably for three to six months without any additional income. Invest in secure funds and other programs such as a 401k retirement plan or IRA.