How to Eliminate Debt: Restoring Your Credit for the Future

Many people in today's economy are so in debt they cannot see a way out. Their credit is ruined, homes are lost and credit cards are closed, or they have overwhelming balances. Sometimes it's because of an illness, but many times it is due to bad financial decisions and loans that should have never be allowed. Whatever the reason for your debt, there is a light for the future and a way to stop the calls, letters and threats. It is all in how you handle paying off the past debts so you can rebuild credit.

1. Request a copy of your credit report. This can be done online from all three agencies.

2. Once you have the report sit down and go through it carefully. If there are duplicates write a letter to the credit bureau asking for one of them to be removed.

3. Check if any are debts that were already paid off, but have not been removed. If you have call the company that placed the debt and ask them to please remove it from your credit report or list it as paid in full. You may have to provide receipts. It will take about 45 to 60 days to finalize.

4. List debts in order of amount. Start with the smallest amounts first. The interest will continue to build on the larger debts, but we will deal with that in a while.

5. Pay OFF the small debts first so it starts to report on your credit as paid in full. This will give you several paid in full on your report right away.

6. Next start paying off the medium debts one at a time for at least two to three debts to show as paid in full.

7. When you are ready to start paying on the larger debts call the agencies or businesses handling them. Ask for interest to be lower or stopped and make large payment arrangements. Try to pay these off in 3 to 5 payments.

8. On some of the largest debts it is now time to make a decision about whatever money you have saved. Use any saved money to pay off a larger debt minus the interest by calling the agency and offer to pay in full minus the interest. Ask for letters confirming payment in full.

9. On the largest of debts ask if they will settle for a set amount. Start with ¼ of the debt. If they will not accept it then move to ½ of the debt. Continue until you reach an agreement to settle the debt that is right for both of you. On you report it will show are settled in full instead of paid in full. This is why you save it for last.

10. To rebuild credit get a secured credit card. This is a credit card you can place about $300.00 on and you will be able to charge up to $200. Pay it in full each month and within six months to twelve months it will change to a regular credit card and you can move the original $300.00 to a savings account. Do not overcharge. This is to rebuild your credit, not to become in debt again.

Always check your credit report about every six month for false reports, unresolved paid off's and identity theft.