Advice on Getting Out of Debt

Dealing with Debt Collectors and Bailiffs sadly has become one of the more frequent and arguably most unpleasant side effects of the current Financial Crisis.

I once had a hysterical conversation with a management colleague of mine who also acted a “life coach” for two debt collectors / bailiffs and he came out with the statement that “you can always spot a debt collector or a bailiff as they are the ones always sitting in their cars drinking tea or coffee on their own as no one else will either buy them one or invite them in for a cuppa”.

The key part of the above statement is that on no account should you never ever let them into your house no matter how persuasive, nice, reasonable or bullying they are. Never let them in as once they get one foot in through the door then they assume additional rights and can claim to have been “invited in” and once inside their rights become almost draconian so rule No 1.

1. Never ever invite them inside your property, house or apartment.

Rule two is don’t be intimidated by debt collectors especially over the phone. They are paid to get heavy; use pre arranged and scripted conversation techniques and just be polite, firm and say “no” to anything you don’t feel comfortable with.

2.  Don’t get intimidated by Telephone Collection Agents.

The third rule you really need to be aware of is that it is essential that you or your professional advisor actually knows where the bottom of the hole you are in is. If you are $20K $220 in debt it is absolutely vital that you know where you are. A colleague of mine once said “if I owe the bank $20,000 it’s my problem as there is actually loads they can do to really make my life uncomfortable but if I owe them $2,200,00  it’s actually more theirs more than mine so just sit back and wait for them to stop bluffing and blustering and get real”.

3.  Know exactly where the Bottom line is and what you (if no one else) are dealing with.

Next up, don’t be afraid to fight your own corner. These folks get paid to give you a hard time, dish it out back. In a former life I actually had to deal with a whole series of debt collection firms who pursued the living daylights out of me when a Company I was a Director of went into Receivership and I had guarantees called in. Some of the collections agencies were pleasant enough to deal with, some were awkward and quite a few were downright obnoxious. The latter were the category that after a while I had the most fun with. If you don’t want to do anything or feel uncomfortable then just tell them so.

I had one collection agency that used to ring me up when I had failed to make a payment on schedule and get really heavy and unpleasant and after a while I just used to dish the sarcasm back as follows:

Debt Collector: ”Mr Morgan you’ve missed another payment…again.”

Me: “How very observant of you, indeed I have.”

Debt Collector: “So what are you going to do about it?”

Me: “At this moment in time, nothing. I’m about to have tea (they always call at meal times) and will think about later whilst having a bath.”

Debt Collector: “Mr Morgan, you’re not taking this at all seriously and this could end up ending very badly?”

Me: “Could it? Oh dear, well there’s nothing that can be done about today, call me back later.”

Debt Collector: “Mr Morgan, you’re not hearing me properly and certainly are not listening to what I’m saying?”

Me: “No it’s you who are not listening to me. If I have some money then I’ll share it out but if it comes between a choice of either buying this week’s groceries or paying you an instalment then sorry boys and girls but you lose.”

Debt Collector: “So you are going to do nothing then?”

Me: “Exactly, what a bright bunny rabbit you are and I’m surprised it’s taken this long for you to catch on”

Debt Collector: “So you’re just going to put the phone down then?”

Me: “Exactly and with a talent for foretelling the future like that, can you also tell me this week’s winning lottery numbers and we’ll split the winnings? Thank you and good bye.”

So the last of this instalment of tips with dealing with debt collection is:

4.   They get nasty? Just dish it back in spades either with venom or with sarcasm. Remember to them it’s just a business, for you its personal so don’t allow them to bully you?

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Getting out of debt can be a long, drawn out process. If you spent years wrestling with financial problems, the solution will not come to you overnight. It can take months, even years to unravel debt difficulties but it can be done. You have some options to help you get started; let’s take a look at four of them:

Credit Counseling. Credit counseling companies are vying for your business. This can be a good option as you shop around to find the best plan out there, but bad as you learn that many companies will charge exorbitant fees or do work for you that you can do yourself. Some government agencies and nonprofit firms provide credit counseling too. For little or no money you may be able to find a professional who can help you navigate through your debt dilemma.

Debt Consolidation Loan. Replace your high interest credit cards with one, low interest rate credit card. You could also see if a lending institution will give you a debt consolidation loan. However, you may have to pay for an application fee, whereas with a credit card you would not.

Home Refinancing. Even with rising interest rates, refinancing your mortgage may make sense and allow for you to save hundreds of dollars per month on mortgage payments. With the monies saved with a new, lower mortgage payment you could use your savings to pay off your other debt.

Cash Out. Alternately to home refinancing, you may have enough equity in your home to cash out and pay off your debt. Importantly, although credit card debt is not tax deductible, a home equity loan is. Ultimately, you can reduce your debt as well as reduce your tax obligation by cashing out.

You have some viable solutions to help you reduce your debt. Learn all you can about each option and select the plan that is right for you.

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What Are Debt Consolidation Services?

Debt consolidation services are companies who specialize in helping you free yourself from the burden of debt. If you have debt that seems to pile up more and more each month, bills for which you can’t even afford the minimum payments, and the trend has been continuing for a long time with no end in sight, then a debt consolidation service may be just what you need to help you out of the tangle of debt you’re in.

How Can Debt Consolidation Services Help?

Did you know that your creditors are the ones who absorb most of the costs when you consolidate your debt? To those you owe, it is a better financial decision for them to accept partial payment from you than none at all if you file for bankruptcy or simply never pay. A debt consolidation services company representative will stand up for you and negotiate with those you owe and decrease your overall debt as well as get rid of interest payments and taxes.

What Do the Creditors Gain From Debt Consolidation Services?

The reason why your debt is so high is not necessarily because you spent too much money. Your debt may be due in large part to the high interest rates and fees that accrued as the months passed without payment. Creditors usually recoup at least the original expenses – that is, the amount the bill was originally before it was doubled and tripled or even quadrupled by over limit and late payment fees and interest charges.

Additionally, creditors can write off all the money they lose in interest and fee payments on their taxes so as long as they still get the original amount that you owe them, they have nothing to lose.

What Do You Get From Debt Consolidation Services?

You get to combine all your bills into one bill payment every month. You get one payment that is considerably lower than all your other bills were before. Your phone will stop ringing off the hook with creditors calling you and asking for money. Your stress will dramatically decrease knowing that you have taken the steps to get yourself out of the downward spiral of debt.

All of this starts when you employ a specialist in debt consolidation services.

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