Solutions to Help Repair Damage Done by Bad Debt Management

A Credit Article Contributed by Brandie King

Solutions to Help Repair Damage Done by Bad Debt Management

You may suffer from the same problems that a lot of other people suffer from, and that problem is bad debt management. Maybe it was your own fault, maybe it wasn't, but either way you need solutions that will help you recover from the effects that your bad debt management habits have had on your credit. Rest assured, there are several options available to you. The solutions below are listed in the order in which your should try them.

Solution to Bad Debt Management: Repairing Credit Report

The very first thing that you should try doing is repairing your credit report. There may be incorrect information contained in your credit report, or errors and/or inaccuracies in the way that items are being listed on your credit report. You have a legal right to dispute errors, inaccuracies, and incorrect information that is contained in your credit report. And the good thing is that not only can you order your credit reports online, you can also dispute items online.

All three of the major credit bureaus have websites that allow you to do this. Visit Experian (http://www.experian.com), Equifax (http://www.equifax.com), and Trans Union (http://www.transunion.com).

Solution to Bad Debt Management: Debt Validation

This is where, when a collection agency contacts you about a debt you haven't paid, you request them to validate the debt. Since the burden of proof lies with them they will have to validate the debt before they can make any further attempts to collect it from you. When you request validation of a debt you should also dispute it with whatever credit bureaus are currently reporting it. You can get a sample debt validation request letter from http://www.creditinfocenter.com/forms/sampleletter9.shtml.

Solution to Bad Debt Management: Debt Settlements

This is where you negotiate with your creditors to set up a plan where you only pay a percentage of the total amount you owe them, as long as you are willing to pay the entire agreed upon amount all at one time. You will sometimes be able to get a creditor to settle for as much as 70% less than what you owe them.

Solution to Bad Debt Management: Debt Consolidation

There are many options available for consolidating debt and you should investigate each one fully before choosing one. Consolidating your debt will take all of the separate monthly payments that you are currently making and combine them into one. Your options for consolidating your debt are home equity loans, home equity lines of credit (HELOC), credit card balance transfers, mortgage refinancing, and debt consolidation loans.

Solution to Bad Debt Management: Bankruptcy

This is a solution of last resort and should only be used by those people who are truly desperate and have tried everything else they possibly can without success. The intricacies, laws, and requirements having to do with filing bankruptcy are too complex to be included in this article, so make sure that you go and do some research before choosing this option.