Divorce is one of the most difficult things to do in one’s life. It means a separation, not just physically but emotionally and financially as well. Finances cause all kinds of concerns. Child visitation, splitting income, alimony and asset division are all part of the process for most divorces. For many who go through this ordeal, it’s a long road to financial freedom. They simply don’t realize that there are a few steps that you can take to decrease your debt without choosing bankruptcy. These options include debt consolidation, settlements, payment plans and other ideas from credit repair industry experts. If you have just been through a divorce, you can get yourself free of debt and finally become financially secure.
#1. How Much Do You Owe
The first step requires that you understand your financial landscape. You should get your free credit report and look at all of your accounts and negative accounts that will affect your credit score. Once you understand who your creditors are and what you owe, you can start going down the road towards financial freedom.
#2. Challenge Your Debts
One way that many people get rid of old debts or even settle their debts completely is through disputing charges on their credit report. In some cases, if the charge is very new, this process won’t work, but it’s worth a try to dispute negative marks on your credit report within reason. If the amount is higher than your original credit limit, it may include tons of fees and late charges that can be negotiated within a dispute. Also remember that creditors only have 30 days to show proof that the negative charges are valid.
#3. Debt Consolidation
This is the first option that anyone in debt after divorce should consider. Debt consolidation moves all of your debt into one pile, so that you can make a monthly payment that is divided between each and allows you stay current on your bills. This helps you pay off your credit bills, medical bills and other finances. There are a few debt consolidation companies out there that actually work with creditors and businesses to negotiate your debt down and get into a solid payment plan. These are the go-to people if you need advice for credit repair. They help hundreds of people become financially secure and end the annoying calls from bill collectors.
#4. Payment Plans
The other way that many people become debt free is to negotiate a payment plan. When going through a divorce, finances are usually tight, and if you have to pay alimony or child support, the amount gets even higher. Approaching your creditors with this information allows you to be honest about your situation and show a willingness to pay as long as there is a payment plan. Many creditors actually remove fees and agree upon a settlement amount that you can pay towards. Most payment plans have shorter terms and only work if you pay on time each month. Otherwise, your account may be put into collections.
#5. Settlement and Charge-Offs
After an account goes to a collection, you can negotiate a settlement. While the company may take a slight loss, it’s actually better for them to get a bulk payment that at least pays off part of the balance. The first thing to note when talking to your creditor is that you have been through a divorce and need to cut back on your spending. If you make a reasonable offer in writing or on the phone, most creditors will work with you as long as you pay upfront. However, the best way to pay off this debt is in writing. The creditor needs to show in writing that your debt is paid so that they can’t claim a “charge-off” on your credit statement.
The most important aspect after going through a divorce is getting your life in order. Financial freedom is a big part of that. Working with your creditors can help you settle your debts and even pay your bills for less.