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Got Debt? Here’s How to Keep Your Dough

L. Lee Acker


The following, written by L. Lee Acker, a financial professional from the Bethesda (Md.) Fleet & Family Support Center, is part of a series of financial blogs aimed at helping you achieve a healthier financial status. In a previous related post – Part 1 of 2 – Lee provided tips and resources to help you wage war on your debt. Now, Lee lets you know there’s no “magic pill”  to solving debts, but attacking debt with a good gameplan is paramount to getting back on track.


How to Resolve Debt Problems

So, let’s turn to the solutions. How do you resolve a debt collection issue? Here’s the process I’ve been using with my clients:
1. Straighten out your budget (so you know what you can and cannot afford to pay).
2. Get, check and correct your credit report.
3. Prioritize first things first (Rent/Mortgage, food/medicine, basic utilities and transportation to and from work).
4. Rank and order your debts.
5. Approach one collector at a time (when possible).
6. Request validation of the debt.
7. Determine if you can pay in full, pay over time (monthly) or settle the debt (Another topic for another post, Debt Settlement.
8. Negotiate and agree in writing.
9. Make good on this new commitment.
10. Start this checklist again with the next debt.

When you have negotiated and reached agreement on your payment, here’s a very specific solution for how to complete that payment:
1. Make sure you have a written agreement signed by both parties BEFORE you start making payments.
2. Pay by money order or cashier’s check (and save your receipts).
3. Mail your payments by certified mail receipt requested (the kind where they have to sign and date when they received payment).

I know this is a lot of extra work on your part, but it will protect you long term should any collector come back to you later and claim you didn’t pay or didn’t pay in full. Yes, this happens!

I’ve seen a lot of debt problems in my career as a Financial Counselor; my own plus thousands of clients. Income level is not a barrier to debt problems. I’ve counseled the homeless and the jobless in shelters. I’ve counseled people with six figure incomes who are impeccably dressed in designer clothes, drive newer model cars and live in “McMansion” homes. When we spend more than we make and borrow to do it, we are all in debt and one misstep away from falling into the yucky world of debt collection.

On that note, let me raise a quick caution flag. If you are under the gun of pressure from a debt collector and seeking answers for relief, be careful.

Don’t fall for the “quick fix solution.” Let me say emphatically that the items on the following list are NOT solutions to your problem (they may even make matters worse):
– rapid refund/anticipation loans
– pay day loans
– title loans on your car
– excessive interest loans from finance companies
– debt settlement contracts
– a debt management plan that you can’t afford to pay
– a consolidation loan that has high interest rates or takes a very long time to repay

Bottom Line: There is no “magic pill” to clean up bad debts. We are all responsible to address our issues.

In my “close call” lawsuit, I did owe the money. I should have acted sooner in speaking directly to the allergist office to resolve the mix up. Take a lesson from me and act sooner rather than later. It can be very costly if you don’t. It really hurt sending that $700 check to the debt collector.

As I guess you can sense, there’s a lot more I could cover regarding debt collection but I can’t get to everything in this entry. We’ll probably have to revisit this topic again in the future (and I sure would like to come up for air right about now). But I did hit the high points and gave you some practical tips. I shared my personal debt collection experience and a little of what I’m dealing with when working with my clients. I know you have a few stories of your own. So, let’s hear about them in the comment section. Someone could be helped by hearing your story and advice. I’ve done my part in sharing this entry. How about you?

P.S. Next time, we will have a guest entry from my fellow Financial Counselor, Brian Pampuro. We work together at the same base. Brian will be blogging about the Month of the Military Child. Brian has three kids of his own and a wealth of stories regarding parenthood. Here’s a preview from him:

“As parents, we often agonize over what type of gift we want to get for our kids during the holidays or when their birthday is fast approaching. April is Month of the Military Child and I will address the best gift a parent can give a child… the ability to save and manage money smartly.”

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