How to Fix Credit Debt

You should seek help if you feel overwhelmed by excessive debt. Illness or long-term unemployment may have caused you to fall behind on your payments, and your problems may have escalated so much that your paycheck barely covers the minimum payments. Fortunately, there are several options for getting back on track, with help possibly just a phone call away. The Federal Trade Commission recommends that you seek impartial counseling help and stay away from any companies offering to charge you a fee for a quick fix to your debt problems.

Instructions

1

Get a copy of your credit report. Visit the website Annual Credit Report to order. Click on "Request Report" on the homepage, or call 877-322-8228. The three nationwide credit bureaus--TransUnion, Equifax and Experian--created the website to make free reports available as required by federal law. Your credit report will provide a thorough overview of your debt situation, including balances, and notations about accounts that are delinquent or have been sent to collection agencies. Having the information readily available will be helpful as you craft a plan.

2

Fix errors on your credit reports by writing letters to the credit bureaus, or challenge the entries online. You may have already paid off an account that is still showing delinquent or someone else's credit card account may be appearing on your file. Challenge the information online by visiting the website for the credit bureau and finding the "Disputes" menu tab or a similar heading. Click on that to enter your complaint.

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
877-576-5734
equifax.com

Experian
P.O. Box 2104
Allen, TX 75013
888-397-3742
experian.com

TransUnion
P.O. Box 1000
Chester, PA 19022
800-680-7289
transunion.com

3

Seek advice from a nonprofit credit counselor--even if you really feel that you would rather handle your problems alone. Advice from the counselors is confidential, and most services are free. A good place to start is with Consumer Credit Counseling Service, which has agencies around the country. The counselors can discuss various options for fixing your debt problems, including debt management and hardship plans. With debt management you make one monthly payment to the counseling agency, which in turn pays all your creditors. The agency negotiates with your lenders to lower interest rates and even reduce some of your balances by reversing some finance charges and fees. You in turn must agree to stay in the program for about four years and not seek or use credit during that time. The counselors can also help negotiate so-called hardship plans that can dramatically lower your individual monthly payments for up to a year while you get back on your feet. Find CCCS agencies by looking in your telephone directory or seek referrals for other nonprofit credit counselors from community organizations such as the Red Cross, Salvation Army or Urban League.

4

Fix your credit yourself by focusing on all outstanding debt. Make payments to bring all delinquent accounts current--or pay them in full. You can also contact creditors to ask for debt settlement agreements. Debt settlement is common for accounts that are four to six months behind or have been sold to debt collectors. The New York Times reports banks and other creditors will often settle the accounts for as little as 20 percent of the balance--though most settlements are for about half the balance. Call or write your creditors for debt settlement agreements. Ask them how much they would be willing to settle for. Then continue the negotiations until you have a deal.