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Open your mail! Countless people struggling with unpaid debt simply ignore the mail and calls from creditors. While "out of sight" may be "out of mind," your debt does not go away because you refuse to look at it. The very first step is facing up to your financial problems. You must come to terms with your situation before you can begin to deal with it.
Run the numbers. Create a list of all of your necessary living expenses like housing, utilities, transportation, food and other monthly bills. Figure out how much money you have left after paying all of your living expenses. Gather all of your monthly installment debts and figure out how far behind you are on payments, and how much money you will need in order to get caught up on all of the payments. Once you have figured out how much you have versus how much you owe, you are in a position to call your credit card company.
Call each of your credit card companies and explain your circumstances. Let them know that you do want to pay your debt, but that you have been overwhelmed and frustrated because you have been unable to get out of the financial rut you are in. Ask your credit card company to close any open accounts, reduce your monthly
interest rate, waive late and overlimit fees, and work out a payment plan for getting back on track. Many credit card companies are happy to negotiate, because if you are far enough behind that you are seriously considering bankruptcy, the creditor might end up with nothing. If you are considering bankruptcy, let your creditor know that you are willing to do whatever you can to avoid filing bankruptcy -- as long as your creditor is willing to work with you to set a realistic repayment plan.
If your finances will allow, make a settlement offer to the credit card company. If you have a lump sum of cash coming in, say a tax refund or gift from family, you may want to try to settle with your credit card company for a fixed amount. Try offering one-fourth to one-half of what you owe.
Once you have reached a payment or settlement agreement, be sure to get the details in writing. This way, you will protect yourself from any confusion or bad faith on the part of the creditor.
Stick with the plan. Be sure to you can commit to the agreement you've made. Learn to live frugally and stay within your means. Do not succumb to the temptation to use credit for optional purchases. If you can't afford to pay cash, then you can't afford it, period.