A bit of an oxymoron, isnt it?
Yes, because the steps are pretty straightforward but the process takes a while. The debt settlement process is not a quick one; it is slow and requires a lot of patience and consistency. So perhaps I can put in a warning here: if anyone claims to have discovered the best debt settlement method that will have you debt free and financially healthy in a matter of minutes, you need to stay away from that person. Even if you declare bankruptcy, it will take years for your credit score to recover. So the process of getting back on your feet financially will definitely take time.
So lets get to it!
The first thing you need to decide is whether you will do this alone, or you will hire a credit counselor or a debt settlement company. These steps can apply to either choice, varying only in the means of application. And here they are:
First, make a money list. This is not really a budget; it is simply a list of your expenditures (monthly/weekly) along with your total income. You will need to subtract these values to find the balance or deficit in your monthly income.
Next, make a debt list. Every good plan starts with a list so bear with me on the lists. Put down everything you owe in ascending order. You may need to check your credit report to make sure you have listed everyone and you have the amounts for each creditor right.
These are your problem definition steps. You may experience increased stress levels here but stay positive because we are getting to the solution steps.
The first of our solutions is to find ways to reduce expenses. You see that money list? Find ways of cutting down expenditure and channeling that money towards debt reduction. It doesnt have to be anything dramatic; just a few reasonable and sustainable adjustments. For instance, reducing cable (you dont watch all the channels do you?), asking for discounts from service providers or simply being a smarter grocery shopper.
Next, pay minimum on all but one. Since you will be paying off your debts from the lowest to the highest (for motivation purposes and all that), use the money from the reduced expenditures to reduce this debt while you pay the monthly rates on the others.
This will continue down our debt list, until we get through all of it. All the money you were using to pay off a previous debt will be directed to the next one on the list. This means that by the time you get to the higher balances at the bottom of the debt list, you will be paying larger amounts that have accumulated from each preceding debt, and you can pay it off faster. Pretty cool, right?
Remember to automate these payments to avoid redirecting that money, and make changes as you clear each debt.
Now you see the quick and easy in the slow and sure right? If you stick with the plan, you are guaranteed to finally be financially free. All the best!