What’s this key fact?

It’s simple.

Lenders don’t want to negotiate. Let me say this again. Lenders don’t want to negotiate.

Why should they? They lent you money in good faith, and they expect to be paid back. In full.

The good news

The good news is that most debts can be negotiated. Credit card debts can be negotiated. So, can medical debts, personal lines of credit, and just about any other type of unsecured debt.

Secured debts like mortgages and auto loans can rarely be negotiated. This is a case where the lender definitely has the upper hand. If you default on an auto loan, one of those flatbed tow trucks could show up at 2 AM and take away your car.

Stop paying on your mortgage, and your house could go into foreclosure, which is a way of saying you’d lose it.

How to get a lender to negotiate

So, if lenders don’t want to negotiate, what can you do to motivate them?

You need to be a bit of a salesperson, and sell them on the fact that you’re having a financial emergency.

Your emergency could be that you lost your job, or you had a major illness. It might be that you’ve had a divorce that left you with all of the debts, or you had a death in your family.

The point is that something drastic happened to you, which has made it impossible for you to repay your bills in full.

Lenders are skeptics

The people at banks and credit card companies tend to be skeptics. They’ve heard just about every hard luck story imaginable. Just telling them you’ve had a financial emergency won’t cut it. You’ll probably need to have documentation that proves your emergency.

Were you hit with a serious illness? You should have the bills available that prove how much it cost you. Have you lost your job? Then, you should have something like the letter about your termination or copies of unemployment checks. If your financial problems were caused by a divorce, you might have your divorce decree at hand.

Lead with the B word

Some experts say you can get to negotiating a debt a lot quicker by leading with the B word as in bankruptcy.

For example, you might say, “I’m in such a financial pickle that if you won’t negotiate with me, I’ll have to file for bankruptcy.”

The reason this is such a powerful weapon gets back to that thing about unsecured debts.

If you file for bankruptcy, your unsecured lenders will get nothing as in zip, zilch, nada. And they know this.

You’ve undoubtedly heard the old expression that half a loaf is better than none. Lenders understand this very well. If you give them a choice of negotiating or bankruptcy, most will choose to negotiate – to get that half a loaf.

What to ask for

When it comes to negotiating with a lender, your initial offer should be low. Very low. Once you name a number you can’t go lower. You can only go up.

Let’s say you owe $6000 on a credit card. Your first offer might be $2000. Is the lender likely to accept that?

Probably not. In fact, you might get a flat turn down. But what’s more likely is that you’ll get a counter offer for, say, $5000. You could counter the counter at $3000, and the lender might agree to that. If so, you’ve just saved $3000.

Before you start jumping for joy

There’s the old saying that there’s no such thing as a free lunch. While you might be able to cut a debt in half through negotiation, it will come at a price.

For one thing, you’ll need to have that $3000 (or whatever) available to immediately send the lender. If you can’t promise this, you’ll be out of luck. Very few, if any, lenders will let you pay off a debt for less than you owe if you can’t promise to make that immediate payment.

Second, debt negotiation, or debt settlement, will have a negative effect on your credit score.

– this is simple. You did not repay your debt(s) in full as you had promised.

How much will this damage your credit score?

It could drop it by 80 or more points.

Debt settlement will also make it more difficult for you to get credit in the future. Lenders are not dummies. When they see you failed to repay your debts in full, they’ll either flat turn down your application or pump your interest rates way up — to offset the fact that you’re now a risky borrower.

Using a debt settlement company

Debt negotiation is essentially the only way to get unsecured debts paid off for less than their balances. Just think. If you owe $18,000, some tough negotiating could get that whittled down to $9000.

However, this assumes that you’ve had a true financial emergency, and that you have the cash available to pay for your settlements. These are two of the biggest reasons when most people choose to use a debt settlement company and not try DIY debt settlement.

Lastly, but certainly not leastly, hiring a debt settlement company means they’ll do the negotiating for you. And because the good ones have done this over and over, it’s just about certain they’ll negotiate better settlements than you could yourself.

We read an article recently suggesting that six-year olds should be taught personal finance. We’re not sure we agree with this but one thing is certain. The overwhelming majority of people that graduate from high school have never had a class in personal finance. In fact, a survey released recently by the nonprofit Council for Economic Education revealed that only 13 states require high school students to take classes in personal finance to graduate. This means that kids in 37 states will have graduated knowing about things like algebra, chemistry, physics, and French, but with no knowledge of personal finance.

Did you not graduate from high school in one of the states that required you to take a class in personal finance? Did your parents not teach you about it? Then, you might be making these mistakes about personal finance and debt negotiation.

Paying just the minimum every month on your credit cards

If you’re doing this, you’re making one of the worst possible mistakes in personal finance. And you might just as well go through life wearing a hat labeled “sucker.” This is called credit card rotation, and experts say it’s the most expensive form of interest known to formal finance. The interest rates on your credit cards could go as high as 36% a year, plus fees that can make it even more expensive. The best thing you can do if this is what you’re doing is … stop.

Not having a budget

Trying to manage your money without a budget is pretty much like setting out on a trip without a map. You might get to your chosen destination, but it will only because of luck. There’s just no way to pay off debts or save for retirement without a budget. If you think that creating a budget would take lots of time and effort, you’re wrong. Apps are now available that make creating and sticking to a budget Drop-dead simple. Three of our favorites are Mint, You Need A Budget (YNAB) and Mvelopes. Mint will track your spending, divide it into categories for you, and even send you an alert if you overspend in one of them.

Taking advice from the wrong people

Do you have friends or relatives that just love to give advice about everything thing from how to care for your lawn to where to invest your money? If, so your best bet is to ignore it, especially when it comes to investing. This is a case where you should definitely get a professional involved. Good financial advisors don’t work free, but the money you’ll pay one can return big dividends over and over. Just be sure to choose one that’s a Certified Financial Planner. They are required to meet certain examination, education, experience, and ethics requirements, so you should be able to trust her or his advice about investing, insurance, and even income tax planning.

Not having an emergency fund

Did you know that, according to the Huffington Post, nearly half of all Americans don’t have less than $500 saved? We hope you’re not one of them. If you are, you need to get to work and create an emergency fund the equivalent of at least three months of your net income. Then, when your car’s engine need serious help, you have to take an emergency trip to the hospital or you lose your job, you’ll have money to cover the cost. If you don’t, you’ll have only one option — the D word — putting It on a credit card and creating (more) debt.

Not understanding you can negotiate your debts

Well, okay, some debts just can’t be negotiated. To prime examples of this are your mortgage and auto loan. The reason they generally can’t be negotiated is because they’re secured loans. You provide an asset such as your house to get the loan. So, if you fail to make your payments, you could lose it.

The easiest debts to negotiate are usually credit card debts. They are unsecured debts. If you fail to make your payments, there’s nothing the credit card company could seize This makes them more amenable to debt negotiation.

Failing to understand the power of the word bankruptcy”

If you contact a lender, such as a credit card provider, who won’t negotiate use the word bankruptcy as in, “If you refuse to negotiate with me, I’ll have to file bankruptcy.” That generally does the trick. Some experts even believe you should lead with the word bankruptcy.

In summary

Personal finance is, without question, in area where what you don’t know can hurt you. The information you’ve read this article can help, but you really need to do some reading. Get a book like The Total Money Makeover by or Dave Ramsey, or Rich Dad, Poor Dad by Robert Kiyosaki. The few hours you’ll spend reading one of these books will pay off big time over the course of your lifetime and as they say, that’s a fact, Jack

Did you know you can negotiate with most lenders? It’s true and it’s becoming more popular. In fact, you can negotiate with most of your lenders, especially banks and credit card companies. This is because loans from these lenders are unsecured. If you default on a credit card debt or personal loan, there’s nothing these lenders could repossess. Their only options would be to sue you or to sell your debt to a debt collector.

How to know when the time has come to negotiate

If you’ve slashed your spending to the bone and still can’t keep up with your bills, the time may have come to bite the bullet and begin contacting your lenders. One hundred percent of them won’t agree to negotiate with you. However, if you contact them early on – as soon as you realize you can’t keep up with your bills – most of your creditors will agree to work with you.

Four things that can be negotiated

It’s usually possible to negotiate to get your interest rates reduced, to have your payments waived for a few months, to make interest-only loans for a few months, or to settle the debt. Of these four options, debt settlement has become the most popular because it’s only way to pay off debts for less than their balances.

Getting prepared

Successful debt negotiation begins with upfront planning and organization. Both are essential for success.

Your first step should be to make a detailed list of your debts. You could do this with a pencil and a piece of paper or with a free spreadsheet program like Google Sheets. Your list should include the names of your lenders, your outstanding balances, their interest rates and your monthly payments.

Next, you need to decide which of your debts you believe you can negotiate and what you want from each of your lenders. For example, in one case your objective could be to settle a credit card debt, while another might be to make interest-only payments on a personal loan.

Your third step should be to review your budget or create one. Having a budget is the only way to know how much money you have available to repay your debts. If you’re creating a budget for the first time, you’ll need to find ways to keep your spending to the absolute minimum.

Deciding which debts to tackle first

It’s important to understand that all debts are not created equal. Some are high-priority debts because they’re secured debts. This could include your home mortgage, past-due rent, and auto loan(s). Next, on your list should be low-priority debts like your credit card debts, personal loans, personal lines of credit and medical bills. You won’t need to address them until you’ve first dealt with your high-priority debts.

The basic strategies

Here are some basic strategies that can improve your chances of negotiating better deals with your creditors.

The first is to never put all your cards on the table. If you’re telling a lender how much you can afford to pay each month, the number of months you want to make interest-only payments, or how much you could pay to settle the debt, always hold something back. That way you’ll have room to negotiate. If you’re lucky, the lender will accept your initial offer. However, the chances of this are slim. What’s more likely is that you’ll get a counter offer. You could then respond with a counter to the counter or accept the lender’s offer. In either case, you’d end up better off financially than you are now.

Second, understand that for the negotiation to be successful, both of you have to get something. For example, if your goal is to get your interest rate reduced, you might offer to extend the length of the loan. Of course, your objective should be to give as little as possible in exchange for getting as much as you can.

You need to also understand who has the edge in the negotiations. This is because whoever has the edge will have the stronger bargaining position. In most cases, this will be your lenders, and this is absolutely true when it comes to secured debts. If you can’t negotiate a deal with them, they could take away your collateral.

Finally, hold your temper. Don’t allow yourself to get angry, confrontational, or be demanding. If you do this, your lender may simply stop negotiating. If you get to the point where you feel you’re about to lose your cool, end the discussion, and then call back after you’ve had a chance to calm down.

In conclusion

If you’re behind on your bills, don’t let it get to the point where your only option would be bankruptcy. Use the information you’ve read in this article to contact and negotiate with your lenders to get better deals, making it easier to repay your debts. If you don’t feel up to negotiating with your creditors yourself, hire an attorney or go to a non-profit consumer credit counseling agency for help.

Are you, like many Americans, struggling to pay off your credit cards? If, so the last thing you want to do is make like an ostrich and stick your head in the sand. Those credit card debts are not going to go away, and this is definitely a case where what you don’t know can hurt you. You need to learn how to manage those credit card debts, and here are 8 important facts that can help.

1. Credit card debts can be negotiated

Consumer Reports recently reported that credit card companies are lowering the interest rates of their customers, reducing their monthly payments, eliminating fees, and even reducing balances owed. If you want to keep your credit cards, contact your credit card issuers. You might be able to get your interest rates or monthly payments reduced, or convert that variable debt to a payment plan.

2. Credit card debts can be settled

You can actually settle credit card debts. This is where you offer a lump sum for less than your balance. For example, if you owed $3200 on a credit card, you might offer a lump sum payment of $1500 to settle it. Of course, if your settlement offer is accepted, you will need to have the cash available to immediately send the lender. While settling the debt will have a negative effect on your credit score, it’s the only way to pay off debts for less than their balances.

3. What happens if your debt is sold to a debt collector or debt attorney

If you fail to pay a credit card debt for more than 180 days, the card issuer will most likely charge it off. It will then bundle your debt with many others, and sell it to either a debt collection agency or debt attorney.

A debt collection agency will try to buy your debt for about four to seven cents on the dollar. This means the agency will make money if it can collect 20% of what you owe. Of course, its goal will be to collect much more. So, once your debt goes to a collection agency you’ll probably be harassed and offered settlement deals. The best thing you could do at this point is to negotiate the best settlement you can, pay off the debt, and move on.

4. Your credit card debt may not be a priority

Your credit card debt is an unsecured debt, as you were not required to provide an asset to secure it. When you prioritize your debts, the ones that should be at the top of your list are the secured ones such as your mortgage or auto loan. Once you get caught up on them, you could then focus on your credit card debts.

5. Your credit card debt has a statute of limitations

If you’re contacted by a debt collection agency, the first thing you need to do is require the collector to verify the debt. You should do this in writing. The collector is then obligated by law to prove it’s your debt. This could be a copy of a statement showing the balance you owe or a copy of the original credit agreement. The important thing here is to check the date as your debt may have passed your state’s statute of limitations. This is generally five years, so if the debt is more than five years old, you’re no longer responsible for it.

6. You could be sued

If you refuse to pay the debt collector, you could be sued. If this happens, it’s critical to show up for your court date. If you fail to do, so the collector could get what’s called a summary judgment, and then garnish your wages.

7. Sometimes it’s best to close some of your credit card accounts

If you’re guilty of overspending, it might be because you have too many credit cards. One way to better manage high credit card debt is to close some of your credit cards. However, don’t make the mistake of closing the credit cards you’ve had the longest. Part of your credit score is based on your credit history, or how long you’ve had credit. Closing cards, you’ve had the longest will shorten your credit history, and damage your credit score.

8. What happens to credit card debt if you divorce

If you live in a common-law state, it’s unlikely you’ll be held responsible for your spouse’s credit card debt. However, If the credit card is in both your names, you were a cosigner or the court orders you to repay the debt, then the responsibility will be yours.

In summary

Don’t stay stuck in a swamp credit card debt. You have read important facts that could help you manage your credit card debts, so don’t despair. There can be light at the end of your tunnel of debt.

If you’re drowning in debt, you’re certainly not alone. Millions of Americans are struggling with their debts. U.S. households with credit card debts owe an average of more than $16,000. A study recently reported by the Huffington Post is that the average U.S. household debt has now passed the $90,000 mark, and this includes household that have no debt.

Alternatives to bankruptcy

Are you so many months behind on your bills you’re considering bankruptcy? If this is the case, it’s important for you to know you have alternatives. There are five of these, making it important to understand them, so you choose the one that would be best for you.

1. A lump sum settlement

Could you get your hands on a chunk of money, such as an income tax refund or an inheritance? If, so you could offer your lenders lump-sum payments for less than your balances. For example, if you owed $5000 on a credit card with interest and late fees, you could offer $2500 in a lump sum to clear the debt. If the lender agrees, make sure it also agrees that this payment will completely satisfy your debt, and get confirmation of this in writing.

Debt settlement, or paying off a debt for less than you owe, will have a negative effect on your credit score. And if a creditor agrees to forgive part of your debt (like that $2500 we mentioned earlier), it will report this on a 1099-C, and this could affect your income taxes.

2. A workout arrangement

This is where you negotiate with your credit card providers to get your interest rates and minimum monthly payments reduced and to have them stop assessing late fees. You might also negotiate with them to forgive past late fees, which would further reduce your balances. The downside of this is that the credit card companies are likely to cut off your credit lines so you’ll be unable to use your cards. This will also impact your credit score, but how much will depend on how the credit card companies report your arrangement or payments to the credit bureaus.

In addition, if your credit lines are closed, your credit score will be dinged because this will raise your credit utilization ratio. If you’re not familiar with this term, it’s the amount of credit you’ve used versus the total amount you have available.

3. Forbearance

If you’re fortunate and your financial situation is only temporary, it’s possible to negotiate with your lenders for a forbearance. This is where they agree to let you skip your payments for two, three, or even four months. Don’t make the mistake of thinking that forbearance Is the same as forgiveness, as it isn’t. At the end of your forbearance, you will still owe the same amount of money. The best way to think about forbearance is a sort of a bridge to a time when you’lll be in better shape financially and more able to pay your debts.

4. A debt management program

If you don’t feel up to negotiating with your creditors yourself, you could go to a nonprofit credit counseling agency for help. You might be able to find one of these near you through the National Foundation for Credit Counseling. Many credit unions also offer credit counseling, as do some housing authorities, and branches of the U.S. Cooperative Extension Service.

If you choose this alternative, you will meet with a debt counselor who will review your financial situation and then make arrangements with your creditors on your behalf. He or she will work with your lenders to get your debts restructured so they become more affordable. These counselors typically will negotiate to have your interest payments reduced, fees dropped, or your payments lowered.

5. A debt settlement company

You can contact your lenders and settle your debts yourself. However, most people choose to use a debt settlement company. If you choose this alternative, the debt settlement company will negotiate with your lenders to get your debts paid off for less than your balances.

If you choose this option, then, instead of paying your lenders, you’ll transfer a set amount each month to an escrow-like account held by a third party. As soon as enough money has accumulated in your account to settle one of your debts, the settlement company will contact you and ask that you release enough money to settle the debt. This process continues until all of your debts have been settled, which can take anywhere from 2 to 4 years – depending on how much you owe. The best debt settlement companies charge nothing upfront, and don’t collect their fees until they have settled all of your debts.

If this is the first time you’ve been contacted by a debt collector, it can be a very scary experience. You’re sitting at the dinner table one night, the phone rings, you pick it up and hear a voice say, “Hello, this is Matt Kurtzman with Affiliated Collection Services. I’m calling about that $767 Macy’s bill from 2014 you need to pay off.”

Wow, you think to yourself, I’d totally spaced that.

The first thing to understand

The first, and most important thing is to ask the collector the amount of the debt and to validate it. It might not even be your debt or the statute of limitations on it may have passed. It could be someone else’s that has a similar name. You need to ask the collector the amount of the debt, and the name of the creditor to whom the debt is owed.

Assuming the collector can verify the debt you have 30 days to dispute it. If you do dispute the debt, the collector has 30 days to provide validation. If you fail to dispute the debt, the collector will assume it’s valid.

If you provide a written request for verification of the original creditor’s name and address, or if you dispute the debt, the collection agency must stop all collection efforts.

If the debt is valid

If it turns out that it is your debt, you must either pay it, or risk being sued over it. However, you don’t necessarily have to pay the full amount of the debt. The little secret of debt collection that collectors would rather you didn’t know is that they probably purchased the debt for pennies on the dollar. Lenders typically batch up a lot of past-due debts and then sell them cheap. For example, the debt collection agency may have paid $30 or less for that $767 bill. This leaves a lot of room for negotiation. You might offer to make a lump sum payment, for say $300, to settle the debt. If you don’t have the money for a lump sum payment, you could negotiate to pay off the debt over a period of months.

Know your rights

Most, if not all debt collectors are paid on commission basis. The more they can collect from you, the more they earn. They don’t learn anything until they collect from you. At the top of their hierarchy is trying to get you to pay in full. They’ll say almost anything to get you to agree to pay off a debt you can’t really afford. It’s believed that 70% to 80% of people contacted by debt collectors pay the full amount they owe out of fear.

This is where it’s important to know your rights. The Fair Debt Collection Practices Act has rules for what debt collectors can and cannot do. For example, they are not supposed to call you before 8 AM or after 9 PM at night. They are barred from calling your employer about your debt once you have told them not to. They cannot threaten you with harm or violence, or contact your friends or relatives about your debt – hoping to embarrass you – and they cannot use swear words, threaten you with bodily harm, or threaten you with jail time.

Know the law

This is an area where you need to sort fact from fiction. The fact is that a collector can only garnish your wages if it successfully sues you over the debt. If you refuse to pay, it could file suit over the debt. If this happens, it’s critical that you show up in court because otherwise the collection agency could get what’s called a “summary judgment,” and then garnish your wages.

Offer a lump sum payment

The best way by far to settle a debt with a debt collector is by offering a lump sum payment. The debt collector wants your money as quickly as possible, so he may be willing to settle your debt for much less than you owe if you can offer one big payment.

You might be able to settle the debt for 40% to 60% of what you owe if you can offer a lump sum payment. As you have read, the debt collectors are paid on a commission basis so it’s usually in their best interests to settle for less than the amount of the debt, get the money, and move on.

It may depend on how much you owe

Finally, some of the large lenders, like the banks, give their collectors blanket permission to settle their accounts, while others look at it on a case-by-case basis At some of the big banks, collectors have permission to settle for 65% of the principal and interest on any debt for less than $5000.

You may know debt negotiation as debt settlement or debt arbitration. But regardless of what you call it, it boils down to the same thing – negotiating with your creditors to settle your debts and for less than their balances.

Again, regardless of what you call it, one thing holds true. You must be having a financial emergency before creditors will agree to negotiate. This could be that you just went through a divorce where you were stuck with most of the debt, you lost your job, or ran up a huge number of medical bills. The point is that creditors won’t agree to negotiate just because you ask. You need to have a reason. And you may be asked to provide documentation that proves your emergency.

Lump sum payments

A third reason creditors might be willing to negotiate is if you can promise to make an immediate lump sum payment in settlement. For example, suppose you owed $1800 on a credit card. You might be able to negotiate that down to $900, but only if you can promise to immediately send the $900 in the form of a cashier’s check, postal money order, or wire transfer.

Where extreme saving comes in

If you’re having a financial emergency already, you probably don’t have enough money on hand to settle any of your debts. This is where extreme saving comes in, which means you will need to act fast, and learn some new habits.

The first thing you’ll need to do is begin to treat saving money as if it was just another bill, and make it a line item on your budget. The easiest way to do this is to have a set amount automatically transferred into your savings account every pay period, and be sure it’s an account where there’s no debit card attached. This will help keep the money out of sight, and will prevent easy access so that you continue to accumulate it untouched. Plus, it’s money you never actually see, so you don’t miss it as much.

Embrace the concept of delayed gratification

It’s crucial to learn how to delay gratification. If you want to be a really extreme saver, you need to think of saving money as being far more important than wearing expensive clothes or driving a new car. You have to learn to not care what other people think of you. You just can’t care about material things. Believe it or not, there are people who have millions of dollars in savings but are driving a car with 200,000 miles on it. If you knew these people, you would guess they only earn about $30,000 a year.

Learn to fight lifestyle inflation

Lifestyle inflation is what happens when you get a raise and use the money to better your life. As an example of this, if you were to get a $5000 a year raise, you could be tempted to buy a better car, get a whole new wardrobe or update your kitchen appliances. If you want to be an extreme saver, you need to fight this kind of lifestyle creep. You need to learn the habit of saving every raise, every bonus, and every dollar you got from your aunt Emily’s estate. To really build your savings rapidly, means maintaining your current level of spending regardless of any new income.

Marry well

We don’t mean by this that you should marry only a man or woman with money, though that wouldn’t hurt. What we mean by this is that you should try to choose a mate that’s also careful about spending money. If you make the mistake of marrying someone who is carefree or reckless when it comes to money, this can make it much harder for you to save money.

Don’t start big

It’s better to start with the goal of saving a small amount out of every paycheck like maybe 3%. If you start off by trying to save 10% or 20% of your net income, you could fail the second or third month, and then just give up and quit. However, if you set a smaller savings goal, and you’re able to achieve it for maybe six months, you might then increase it to that 5% or even 10%.

Use this one simple rule

If you want to become an extreme saver, you need to follow one simple rule: If you can’t pay cash don’t buy it. Of course, you can continue to use a credit card but never charge more than you can pay off at the end of the month. Going into debt – especially credit card debt – as it just keeps you from saving money.

In summary

Extreme saving for debt negotiation (or debt settlement) is just not that difficult. Develop a budget then follow the tips you just read in this article, and you should find saving enough money to begin negotiating your first settlement both fast and easy.

Medical debt has become America’s second biggest problem – second only to student loan debt. We now pay three times more for medical debts then we do for credit card and bank debts combined. Even more shocking is that, according to one recent survey, 60% of all bankruptcies filed in the US were caused by medical debt. And, according to a survey done in 2014 by the Commonwealth Fund, 23% of adults age 19 to 64 reported they either had problems paying their medical bills or were unable to pay them.

If you are struggling with high medical bills

As you can see, if you’re having a problem with high medical bills you’re not alone. Fortunately, there are things you can do to manage that debt.

The first it is to review them very carefully because according to the General Accounting Office (GAO), roughly 99% of all hospital bills contain overcharges. There are other experts that believe there‘s an average of $1300 in overcharges per hospital stay. You just need to examine each of your bills carefully.

Get and review itemized invoices

If a doctor or hospital has not sent you an itemized invoice, you need to get one. Read each line on the bill, and do the following:

  • If there’s any medical jargon you don’t understand, call the billing office and get an explanation
  • Look for charges that seem unreasonably high. You can research the standard industry rates for certain items or procedures. This might make it obvious you’ve been overcharged – like $80 for a pregnancy test or $10 for a box of tissues.
  • If there are items you don’t understand, take notes so you can discuss them with your provider.
  • Finally, if you have questions, write them down– again to discuss them with the hospital or doctor

See if your state limits hospital charges

Some states have passed laws that place limits on what hospitals can charge for their services. As an example of this, California has the Hospital’s Fair Pricing Act, which puts a cap on how much self-paying patients can be charged for treatment. Minnesota, Illinois, and New York have similar laws.

Make an appointment with the billing office

If you find what you believe are errors on your medical bills or if there are charges you don’t understand, make an appointment with the doctor’s or hospital’s billing office to discuss them. And don’t hesitate to challenge whatever you think are overcharges, double billing, or anything else that seems wrong or unfair.

Ask for a discount

If you can’t pay a bill in full, the first thing you should do is contact the provider and ask for a discount. As you have read, many people are simply not paying their medical bills. If you show you’re willing to pay at least something on your bill, you might be offered some kind of an accommodation.

If you have some cash available

One of the secrets medical providers would rather you didn’t know is that medical debts can almost always be negotiated. They are unsecured debts, meaning that if you default, there’s no collateral the provider could seize. If you have some cash available, you might contact the provider and offer a reduced lump-sum payment to settle the debt. For example, if you owe$1800 to a hospital, you could contact it and offer a lump sum of maybe $900 to settle the bill. You might be surprised at how many medical providers will agree to settlements like this.

Ask for a payment plan

If you don’t have the cash to settle with a provider, ask if you could pay the bill over time. Some doctors and hospitals will accept as little as $50 a month. But they may charge interest. If they agree to a payment plan, make sure you get all the details in writing. That way, if there’s ever a misunderstanding over your arrangement, you’ll have what you need to prove your case.

Offer a down payment

Finally, if you have some money available, you might offer to make a substantial down payment of 10% to 25% of your bill in exchange for a substantial discount on the overall bill.

In summary

Facing big medical bills can be scary and stressful, but as you have read, there are things you could do to at least manage them. It begins with reviewing all of your bills very carefully to see if you have been the victim of overcharges or errors. Beyond this, you might be able to negotiate a discount, a settlement for less than you owe, or get a payment plan. If all this fails, you could always do what so many people facing big medical bills have done and that’s declare bankruptcy

Have your debt problems gotten so out-of-control that you’re having trouble paying your utilities or your mortgage? Are you months behind on some of your bills?

If so, you might consider getting help from a debt relief lawyer. These are attorneys that specialize in helping their clients cope with their debt problems. They can’t make your money problems disappear as if by magic, but using one could be a big step towards debt relief.

However, deciding to use a debt relief lawyer isn’t something you should do without giving serious thought to it. These attorneys are usually not cheap.

Here are five things it’s important to know about debt relief lawyers – what they do and how much using one may cost you.

What a debt relief lawyer does

What one of these lawyers will do for you will depend largely on how much debt you have. They might negotiate with credit card companies, auto lenders, and other creditors, to get them to forgive some of your debt. Alternately, they might work with your creditors to establish payment plans where you pay only an amount you could actually afford each month. If you have debt problems, the debt relief lawyer might help you negotiate through the process of either a chapter 13 or chapter 7 bankruptcy.

A chapter 7 vs. a chapter 13 bankruptcy

If you and your debt relief lawyer agree that your best option would be bankruptcy you must then decide whether to file for a chapter 7 or a chapter 13 bankruptcy.

If you choose a chapter 7, most of your unsecured debts will be eliminated. This is why a majority of people that file for bankruptcy choose this option. However, this type of bankruptcy is not entirely pain-free. You could lose some of your valuable assets, like your car, as the bankruptcy trustee might order it sold, and the money distributed among your creditors.

In a chapter 13 bankruptcy, the judge and your attorney will create a repayment plan where you pay back your creditors with payments you can afford. You might actually pay back less than you owe, but this will depend on your bankruptcy agreement. In short, your debts won’t be totally eliminated as you will be required to pay back at least part of them.

A chapter 7 bankruptcy won’t eliminate all your debts

A debt relief attorney can help you along the path to debt relief. However, if you hire one to help you get through a chapter 7 bankruptcy, you could still end up with debts.

According to the National Association of Consumer Bankruptcy Attorneys, some debts can’t be discharged through a chapter 7 bankruptcy. This includes secured debts like your mortgage, and auto loan. Other debts that can’t be discharged include tax debts, student loan debts, alimony debt, child support debt, spousal support debt, and any debt you obtained through fraud.

There will be consequences

Using a debt relief lawyer to help you through a chapter 7 bankruptcy could get you a fresh start. But there will be consequences.

Whether you choose a Chapter 7 or Chapter 13 bankruptcy, your three-digit FICO credit score will be reduced considerably. In fact, it may cause it to drop by 100 points or more. The reason this is important is because lenders use this score to determine if you would qualify for an auto loan, personal loan or mortgage. In addition, they use this score to calculate your interest rates when you borrow money.

Having a low score means you’ll be stuck with higher interest rates, which will boost your monthly payments. But, even worse, a bankruptcy will stay in your credit report for a long time. A chapter 7 will stay there for 10 years, while a chapter 13 will be there for seven years. Every time a potential lender gets your credit report, it will see you had a bankruptcy. Plus, a bankruptcy will stay in your personal file for the rest of your life.

These attorneys aren’t cheap

What debt relief attorneys charge will depend on how much you owe, and the services she or he performs in your behalf. According to the legal website Nolo, it might cost you from $700 to $2500 to have an attorney file a Chapter 7 bankruptcy for you. In comparison, it costs from $2500 to $6000 to have an attorney file for a chapter 13 bankruptcy in your behalf.

Nolo also says that if you work with one of these attorneys on an hourly fee basis, expect to pay from $125 to $350 an hour.

A better option

Many people choose to use a debt settlement firm instead of a debt relief attorney. This is because using a debt settlement company usually costs less than using a debt relief attorney. Debt settlement won’t damage your credit and your credit score as severely as a bankruptcy, though it will affect  it. And when lenders see you settled your debts, instead of declaring bankruptcy, they will see that you at least did what you could to repay your lenders.

You’ve probably heard of subprime mortgages, payday loans, and home equity loans. These are just a few of the financial products now available. And there is a sort of new type that could really drag down your finances if you’re not careful.

What is this loan? It’s a car title loan.

Car title loans explained

You might think that a car title loan is the loan you take out to buy a car. However, that’s not actually the case. It’s more like a home equity loan. It’s a loan people get when they need some fast cash and don’t mind using their cars as collateral. The name comes from the fact that the lender usually takes the car title and holds it until the loan has been completely repaid. Even worse, the lender usually keeps a copy of the car’s keys so the vehicle could be easily repossessed if the borrower fails to repay the loan.

They can be very costly

Car title loans can be very expensive. It’s possible to borrow $900 but then have to pay back $2000. Would you put $900 on a credit card knowing that you would have to pay back $2000? Probably not. The hard fact is that car title loans cost a lot in exchange for some fast cash.

Their biggest danger

The biggest danger to people who get car title loans is that they obviously need their cars. They may need them to transport their kids to school or to get to work. What happens if it turns out they can’t pay back their loans? They will probably lose their cars and have a very bad mark added to their credit reports, which will make it more difficult for them to borrow money in the future.

The best case

In a best case scenario, where the borrower pays back the loan, he, or she still stands to be gouged by unbelievably high interest rates. The Center for Responsible Lending recently reported that borrowers typically pay a 300% APR on a title loan. This same report stated that people who borrowed $950 and took 10 months to pay back the loan paid an unbelieveable $2140 in interest!

How to avoid a car title loan

Of course, the best way to avoid getting one of these loans is to just make a note in the back of your head that says, “no way.” In other words, the best thing you could do is not get one. There are alternatives available that could help you get through tough financial times. For one thing, you should have money in an emergency fund that you could use to cover unexpected expenses like a medical procedure or car repair. Another good idea is to monitor your credit score on a regular basis, and then do what you could to improve it. Then, if you ever need quick cash to get out of a jam, you should have some borrowing options.

How to get out of a car title loan

If, for some reason, you got a car title loan, the best thing you could do is get out of it. Do you have a good credit score? Then, you do have some options. For example, you might be able to get a debt consolidation loan and use the money to pay off the car title loan. Just be sure that you go to a reputable company for the loan, like a local bank or credit union.

A second answer is to revise your budget and reduce your spending so you’ll have more money to pay off the loan faster, which would reduce the amount of interest you would pay. If you do decide to revamp your spending, make sure you create a realistic budget so you won’t find yourself so strapped you can’t stick with it.

Negotiating your way out of the loan

If you can put together some cash, you could go to the lender and try to negotiate your way out of the loan by offering a lump sum payment to settle it. For example, if you still owed $1000 on the loan, you could contact the lender and offer to make a lump sum payment of maybe $500. Some lenders will refuse to negotiate but if you can convince your lender that it’s either this, or you’ll be forced to file for bankruptcy, it just might agree to your settlement offer.

If nothing works

If you can’t utilize any of the options described above, you might consider downgrading your car. There are various reasons why this will be a complicated step. But if you can’t meet your monthly loan obligations, this might be your only choice. Let’s say you have a car that you purchased new, which is now valued at around $10,000. Let’s also say you used the car’s title to get a $2000 loan but you can’t pay it back. If you were able to sell the car for $10,000, and then buy a new one for $6000, you should have enough cash to pay off the title loan, as well as any fees or extra charges. Of course, one complication is the fact that the lender may have your car’s title, so you would need to talk with it before exercising this option.