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With the constant pressure to “Buy, buy, buy” it’s easy to wind up deeply in debt. Today, many people that have lost their jobs need to know how to get out of this debt quickly, while still meeting their current financial obligations. Unfortunately, many of the answers to these problems will leave you with a bad credit rating. However, if you need to pay certain bills and still want to achieve freedom from debt, these solutions may be your only opportunity to get out of debt.

Credit Card Settlements

Once you miss a certain number of credit card payments, your creditors must write the whole amount off as a bad debt. While they can still take legal action to force you to pay your bill, they also have to stop charging interest. In some cases, you’ll find that your creditors will send you settlement offers – their attempts to recoup any money on these bad debts. Typically, their offers will be anywhere from 30 - 70% of the final balance. You may also be able to obtain these reductions yourself by calling and trying to negotiate with your creditors.

For the most part, these settlements will damage your credit report – however, they’re still better than going to court or filing for bankruptcy. If at all possible, if you’ve stopped paying your credit cards, try to set aside a little extra money each week, so that you can take advantage of these settlement offers when they come in.

Managing Medical Bills

Catastrophic medical bills have left many people homeless, on top of suffering from life threatening illnesses. If you don’t have medical insurance, there’s no question that you’re at an enormous disadvantage should you develop a serious illness or injury. Even if you can’t afford full HMO coverage on your own, look into whether you qualify for a high deductible health plan or temporary health insurance. At the very least, this will cover hospitalization and other major medical expenses without sending you to the poor house.

If you’ve already accrued a large number of bills, you have the right to know what billing codes are being used to ensure that your bills are accurate. Ask the Medicaid representatives in your state about their maximum payment rates. In many cases, you’ll find that your bill is as much as 75% higher than this amount. From there, you can try writing a letter to your medical provider explaining your circumstances, as well as your research on payment amounts. If you aren’t able to discharge your debt, you can ask for a hardship-based discount or try to make long-term payment arrangements.

Paying Off One Debt at a Time

If you have too many debts, it may be necessary to focus on just one or two of them before you start working on the other ones. For example, if you have five credit cards, you may want to pool all of your money into paying the card with the highest interest rate. Even if you run late on the others, you can try to catch up and pay them off as you go. While this will damage your credit report, leading to higher interest rates, you’ll still be making progress in getting rid of other debts. Of course, if you use this method, it’s crucial to destroy your credit cards once they’ve been paid off and never use them again.

Although you may not like being in debt, getting out of it may seem impossible. That said, even if you’re on a tight budget, it’s still important to do what you can. Some debtors will be satisfied with the fact that you’re making some payments, while other cases may require using strategies that will damage your credit rating. As you might expect, it’s best to seek competent financial and legal advice in order to find the option that works best for you.