If you have manageable debt, make a budget and follow your own payment plan. If you’re current on your bills, continue to make the minimum payments at least. However, in order to make real progress in paying off your bills in a reasonable amount of time, you will need to pay more than the minimum payments. Concentrate on paying off the bill with the highest interest first. Once you’ve paid off that bill, focus on the one with the next highest interest. Keep doing this until all of your bills are paid in full. Be sure not to continue using credit cards while you are still in debt. 

If you have missed several months of payments, your creditors will probably be willing to accept less than full payment to pay off your debt. You don’t need to pay anyone to negotiate with your creditors; you can do this on your own.

Be sure to get any agreements in writing.

Be warned that if your creditors accept less than full payment to satisfy the debt, there may be negative consequences. Your credit score will be negatively impacted, and you may end up owing taxes to the IRS. In order to prevent these circumstances, take the following precautions: your written agreement should state that the arrangements you’ve made resolve the dispute regarding how much is owed, and accordingly the company will not report this to the IRS as forgiven debt. The agreement should also state that the creditor will report the debt as paid in full to the credit reporting agencies. Make sure that the agreement does not contain a confession of judgment. If it does, the creditor will be able to enter a judgment against you if you miss a payment.

Furthermore, for your protection, don’t use your main checking account to pay your bills. If you want to use a checking account, open a checking account dedicated only to paying this creditor. You don’t want your creditor to have the account number for the checking account where you keep most of your money. Be sure to write the balance owed on each payment. When you make your last payment, write “Payment in full” on the check. If the creditor has a judgment against you, be sure that the company records a satisfaction of the judgment with the court.

If you are being contacted by a collection agency, insist on dealing directly with the creditor. If the creditor tells you to deal with the collection agency, get that in writing. When making a payment to the collection agency, make it payable to the creditor, not the collection agency. Again, don’t use the checking account where most of your money is located.

If your debt has been sold to another company, be sure to get written confirmation of this exchange from the original creditor.

If you decide your debt has become overwhelming, there is a safe, quick, and easy way to get out of serious debt – bankruptcy. Under our bankruptcy laws, creditors can be stopped from harassing you, garnishing your wages, taking money from your bank account, and foreclosing on your home. Bankruptcy can provide you with a fresh financial start. If you are deep in debt, consult with an experienced bankruptcy attorney to learn about your options.