A few years ago I figured my family would be better off if I was killed in a car accident as my life insurance would pay off all our bills and my wife would be able to pay off the house.

Looking back on this I realize just how desperate things seemed. I was up to my eyeballs in debt and could not make all of my monthly commitments, then, the phone started to ring and the bills turned different colors - it was the "Collection Department". Well, I thought that was bad; after a few months of them calling, it got worse. My creditors had sold my debt to a Collection Company who had me on speed dial.

I was a guy in sales who had good and bad months, only at the time, I was in a bit of a dry spell and the collection calls did not make my life any easier. They would call me at home, at work and on my mobile phone.

I began to think that my only option was to claim bankruptcy, or as I said before, get killed in a car accident or something, so the insurance paid off.

THERE IS A STRATEGY TO GET OUT OF DEBT!

A friend of my suggested something simple and also helped me understand a bit of how the collection companies work:

Collection Companies are in the business to make money, they either make money off of interest, are paid a percentage of the collection, or a combination of the two. They are hired by the company that you owe money to, because the Collection Companies methods are very harsh and typically get results. The Collection Companies will threaten your credit bureau (big deal) they will mentally try to beat you down, they will try anything that they can to get money out of you. Here is the thing, many people have just decided that they do not want to pay and are playing just as many games with the Collection Companies as they are playing with those that owe money. If this is you and you are just playing games, leave this page now.

If you go bankrupt, you lose AND they lose; the collection company makes no money and the company that you owe money to has to write off your debt as a business loss.

Here is the solution - Develop a Win-Win:

Figure out what you can afford to pay per month, for three months in a row, without having to settle with eating the Kraft Dinner box before your next pay check...$10, $25, $50, $100, then figure out what the number could be the following three months. Try to make the number twice as much for the second period (example: Three months worth of post-dated cheques for $25, followed by three months of post-dated cheques for $50)

Then, YOU call the Collection Company (not when they call you to beat on you for money) and TELL THEM what you are going to pay them; they won't like it, but THEY HAVE TO ACCEPT IT! If you are showing a "reasonable effort" to pay back your debt, they have to leave you alone and accept the money. Six months is more than enough time to get a better job, start a business, or whatever and will likely be enough time to get generally back on your feet.

Now, if you are not able to completely stand the monthly bills after six months, then, call them up an tell them what you are going to do next. By the way...this works with the banks and car companies too, but probably three months at the max.

The point is, as long as you demonstrate to them that you will be regular in your payments and that the payment amount will go up over time, they will leave you alone. If they decide to strike your credit, this is not nearly the hit you will get on your credit report if you claim bankruptcy. In fact, showing future creditors that you worked your way out of debt instead of going bankrupt will earn you bonus points.

You can do it, I know you can!

To Your Success!

Greg Nicholls - Nicholls Consulting - All rights reserved