Several friends and family have told me what to do in situations like: "I can not pay my credit card", "the interests are eating me", "I can not stand the offices of collection "
And, once I've heard his whole story, we always get to the same question "how can I get a debt forgiveness?
If you have not heard the term before, I'll explain what it is:
What is a debt forgiveness?
Legally speaking, it is the forgiveness of a debt. It sounds like something many expect, in fact, several make the mistake of waiting for many years without paying with the idea that their debt will be eliminated. Obviously that never happens.
There are different reasons why a creditor could forgive a debt:
Volunteer Both parties reach an agreement and the creditor decides for his own pleasure to waive the collection of the amount owed.
Forced. When some legal process is filed against.
Partial. It is achieved through discounts that are negotiated between the creditor and the creditor.
Mortis cause. It occurs in case of death of the debtor.
Which is the best option?
To begin with, no bank or collection office would give up the total amount of money owed to you. As for the other alternatives, if your record is in good condition, no type of debt cancellation is eligible for you, in that case you better choose to consolidate your debt.
If you find yourself in an opposite situation, where you have stopped paying and are looking for a cancellation, you should:
Partial payment of the debt.
If you find yourself stuck in the "I can not pay my credit card", using this resource will allow you to cut the total debt and pay less than what you had as a total balance. This partial payment is very variable, since everything depends on the negotiation that is reached with the party involved.
One of the consequences of getting a discount.
When you make the payment of a debt through a negotiation, it is certain that in your credit history you will find a brand that says code 97 or removes. This means that the total payment of the debt was not made, but that it has already been settled.
Will you be denied credits if you pay with removes?
Yes, it is one of the disadvantages. However, if you pay your debt with the help of Solve your Debt, there is an opportunity to rebuild the credit history. How? It offers the best customers a credit to suit you, this means that you can pay without problems and help you get better grades on your credit report.
How to negotiate a settlement: on my own or with help?
Normally when the debt is not paid or the arrears begin, the bank or the collection office, they get in touch with the person who owes them. It is true that you can negotiate with the financial institution, but the objective is not always achieved.
As a tip, if you decide to negotiate on your own:
Pay attention to everything you are listening to.
Read each one of the proposals that you make.
Make numbers, get the accounts before signing.
Be clear and ask them to be transparent with you.
I have known customer stories where for some reason the instructions received were not clear or charged more than they should, so they do not manage to close their accounts correctly. This causes the debt to continue generating interest.
When you go with a credit repair, the road is safer and you will have as a guarantee that while you make your sections in time, a group of specialized negotiators will contact the necessary people so that the best discount is achieved without problems.
Do not forget the debt settlement letter.
When a credit card account is closed, it must be in zeros. In addition to seeing your account statement that is already completely clean, it is important that you notify the bank. You can do it by phone or by attending the corresponding bank.
Once it is clear why you want to close that account, you can ask the institution to provide you with a document (settlement letter) stating that the debt you had has already been settled.
All banks are required to make the termination letter, after you have been notified that your debt has been settled, you must request it. The approximate time you should wait is 40 business days.
In case you do not get your settlement letter:
It does not usually happen, but if this is the case and the corresponding institution does not grant the termination letter, you must receive another document that also indicates that your account is already paid.
If this does not happen, you can approach the National Commission for the Protection and Defense of Users of Financial Services (CONDUSEF), which is the government institution that regulates the performance of financial institutions. Same that can guide you in any doubt you have.
The National Commission for the Protection and Defense of Users of Financial Services(Condusef) recently reported that 9 out of 10 bank claims correspond to credit and debit cards, reiterating that both products are the most used daily, but also the most claimed by users. Of this number of claims, 76% correspond to possible fraud and the amount claimed amounts to 5 thousand 891 million dollars.
Handling a credit card can be a two-edged weapon if you do not know all the rights and obligations you have when using your plastic; therefore, the Condusef considers that the main thing to take into account is that the use of the card is a debt that has to be paid, and recommend to keep in mind that the bank cards are not additional money that may be available.
Five things you should know before requesting or processing a credit card:
Choose the card that best suits you
We all have different consumption habits and interests, in the same way, we use some credit to cover certain needs. It is important to make a comparison and know the cards that best meet your needs. Take into account if you make recurring payments on the internet, purchases at department stores, travel a lot or if you want to have financial support in case of an emergency. On its website, the Condusef offers you a comparative to choose the card that suits you best.
Compare the CAT
Knowing the Total Annual Cost (CAT), it helps you compare the costs of the different loans or loans offered by the banks, as well as helping you to understand the real cost for which you should settle the loan.
According to the Condusef, "the CAT, is an indicator that helps us compare the cost of loans", is composed of the interest rate that the bank would charge us, and commissions additional to the cost, such as the commission for opening, life insurance or damage, everything depends on the type of credit that is contracted.
Know your commissions
Each credit card charges different commissions depending on the institution or the type of plastic. Among the most common charges is the annuity, which is the charge that the bank asks the client to keep their card active. Another very common charge is the provision of credit, a service offered by financial institutions for the user to have cash in ATMs.
If you did not make any payments in the month, the institution may charge you a commission for non-payment, even if you did not cover the minimum on the deadline and before the next cut, you may be charged for collection expenses. Similarly, there are financial institutions that charge a commission in case of theft or loss of your card.
Keep in mind the payment deadline
It is the date on which you must make the minimum payment, total payment or the "payment to not generate interest". Sometimes some payments to credit cards are not counted on the same day they are made, some may take up to two business days to reflect, therefore, specialists recommend making your payment before the deadline.
According to the 2017 National Survey of Financial Inclusion, 70% of people who have a credit card said that they have fallen behind more than once with the payment of their debt, so it is important to be punctual with your Payments.
Know the date to make claims
In case you detect unrecognized charges or services not contracted on your statement, you should know that there are limited times to file any claim with the financial institution.
Always check the account statement and keep your vouchers. In case of errors or omissions you can present clarifications.
Being aware of your account statement will help you detect possible anomalies regarding the use of your plastic, in this sense, online banking can be a good ally to monitor your movements. The Condusef recommends constantly reviewing your credit history and periodically changing your passwords. If you are going to make purchases online, it is suggested to do it with prepaid cards or make them with those with the least credit line.
Credit Card Debt Solutions to Eliminate Your Debt
Credit card debt with high interest rates can be difficult to manage and can cause problems in your budget. As the minimum payments increase, your cash flow or disposable money decreases and this situation will make it increasingly difficult to cover your monthly expenses, start living from check to check (week to week) and you will have to juggle the bills to pay, that is, to stop paying some to pay others to stay afloat. This situation is very stressful and exhausting, but there are a variety of solutions you can use to regain control of your personal finances.
The option you actually use will depend on your own financial situation, the amount of debt you have to eliminate and your credit score. Choosing the right solution can restore your budget balance and help you avoid additional credit losses and damages. On the other hand, the wrong solution can put you in an even more disadvantageous situation for you.
Wide Range of Solutions
Debt Consolidation Program
Debt consolidation programs are an assisted form of debt consolidation. You work with a certified nonprofit credit counseling agency to establish a payment plan that works for your budget. The program consolidates your debts into a single monthly payment with reduced or totally eliminated interest charges.
Negotiation of the Interest Rate
If the charges with having a high interest in your cards are so significant that they prevent you from reducing credit card debt, negotiating with your creditors to get lower rates can provide you with the advantage you need to eliminate your debt. If your interest rate goes down, a higher proportion of each payment will go to eliminate the principal of your debt. Read tips on how to negotiate effectively.
Debt Reduction Strategies
In some cases, you may be able to adjust your budget to eliminate your excessive debt burden on your own without any special tools. Learn how to set your budget to get a fast track for eliminating your debt. Compare two proven methods for debt reduction, to see if any of them may be right for you.
Credit Card Balance Transfer
This is a type of debt consolidation in which you transfer the balances of your existing cards to a credit card that has a 0% Annual Interest Rate (APR). This means that for a period - usually 12 to 24 months - 100% of each payment you make is going to pay off your debt (the principal). This can be an effective method of elimination if you have $ 5,000 or less in credit card debt.
Consolidation of Personal Debts
A personal debt consolidation loan provides funds that you can use to pay off all of your credit card balances, leaving you only the loan to pay. Loans tend to have interest rates much lower than 10% or lower, if you have the proper credit score, so you can minimize the interest charges and get your debt in a more manageable fixed payment schedule. With the right terms, you can get out of debt in less than five years.
Credit counseling is a free service that can help you focus efficiently on the proper debt solution according to your needs. A certified credit counselor can help you assess your situation to identify the right solution that meets your needs and goals. If you are eligible for a debt management program, they can also help you enroll directly, but are required to review all options so you can get the perspective of an impartial expert, without any obligation on your part.
Debt Management Program
This is a form of assisted debt consolidation, which works very well if you have a large volume of debt and a less than perfect credit score. You enroll in a program through a credit counseling agency, who will develop a payment plan that works for your budget. Then negotiate with your creditors on your behalf, to reduce your interest rates. The total monthly payments are normally reduced by 30-50%, and most people complete the program within 60 payments or less.
This really should only be explored as a last resort for debt relief, before filing a bankruptcy filing. If you have tried all other options without success, then you can consider a debt settlement plan in which you can settle your debts for an amount less than the total amount owed. This can cause significant damage to your credit score and the results may vary, but it may be your best option if your situation is really critical.
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