How to Get Rid of a Creditor
Owing creditors can present certain challenges, especially if you're behind on your payments. Credit card debts can lower your disposable income, particularly if high interest rates are charged. If your account is in bad standing, you may receive frequent phone calls demanding payment. You can reduce your debt and get rid of some of your creditors. With less debt, you'll have more disposable income to save or spend.
Other People Are Reading
Instructions
-
-
1
Calculate the amount you owe. Obtain information from your statements, and use a calculator to add up all your debts.
-
2
Evaluate your disposable income. Develop a budget to determine your disposable income. This is the money that remains after you've paid recurring expenses such as mortgages, auto loans, utilities and other minimum debt payments.
-
-
3
Decide how to tackle your debts, and create a payoff plan. You can pay off debt with the lowest balance first, a strategy Dave Ramsey favors, or you can pay off the debts with the highest interest rate first, which Suze Orman recommends.
-
4
Increase payments to get rid of your creditor sooner. Put your disposable income to use and break the routine of paying just the minimum. Eliminate debts and creditors faster with higher payments every month until the debt disappears. For example, if you normally pay $20 a month on a $1,000 balance, increase this to $100 a month if possible to help eliminate the balance in about one year.
-
5
Talk to your creditor to determine whether a debt settlement is an option. When you owe a sizable sum you're unable to pay, contact the creditor to try to negotiate a settlement in which the creditor accepts less than the amount owed as payment in full. For example, if you owe $6,000 on a credit card, the creditor may settle for a payment of $3,000. The creditor is not obligated to accept a settlement, and a creditor will consider it only if you are delinquent on your payments.
-
6
Consolidate your debts to get rid of a creditor. Apply for a home equity loan, home equity line of credit or a cash-out refinance to consolidate your debts and pay off some of your creditors. You may be able to use your home's equity to borrow funds to pay off creditors charging a higher interest rate.
-
1
Tips & Warnings
Creditors may consider a settlement if you're contemplating bankruptcy or if you're behind on payments. Settlements allow creditors to recoup some of the money owed to them. However, you may owe income tax on the difference between the amount you owed and the amount you paid in the settlement.
