In this post I look at settling debt and ways you may be able to achieve this. It could be that you have a lot of debt like myself, and some of that debt includes reasonably small balances.
It can be a great motivator to settle one of your debts as it just feels good to know that you have one less debt collection agency on your back, especially if you have a lot of them.
I owe money to a lot of different companies and you can see an overview of my debts on this blog.
I have some very large debts and some smaller debts that I could settle if I really tried.
One such debt is my TXT Loan debt that originally was £249 and now stands at £35.25. As this is my second smallest debt, it could be one I choose to settle early assuming I have the money.
Offering a Debt Settlement
If you have recently come into some money, you may be able to settle some of your debt with that money. What you would do is contact the company you owe the money to and offer them a settlement figure, perhaps as low as 20% of the original balance and work from there, negotiating a deal you are happy with.
However even if you settle the debt, the default will only be marked as partially satisfied on your credit file. However this information would drop off your file six years from the date the default was first entered.
Reclaim those charges and Payment Protection Insurance Policies
If some of your debt is made up of bank charges, overlimit fees or late payment fees for example, you should find out if you can get these charges refunded. If you have a lot of charges applied to your accounts, it could help reduce your outstanding balance and allow you to settle the account that way.
If you took out Payment Protection Insurance on your loans, mortgage or other credit products and you think this PPI was incorrectly sold to you, you may be able to reclaim the PPI cost.
In some cases the amount could be quite substantial which may allow you to settle more than one debt. You can either do this yourself or you could use a company that specialises in reclaiming PPI.
Special Repayment Arrangement
Some Debt Collection agencies may agree a repayment plan whereby you pay a higher amount to them for a period of time and the rest of the debt is written off. However this can be difficult as sometimes the monthly payment required can be unattainable and may affect you repaying your other debts, which is not a good idea.
Selling unused Items
If you have a large amount of stuff you no longer use, it might be worth selling it on eBay or at a car boot sale. This might bring in some extra cash to help you with settling a smaller debt.
You could also sell any old mobile phones you have lying around. They might not be worth much but every little helps. You may have a hidden gem you never know. You could either sell them on eBay or send them to someone like Mazuma Mobile.
Paying off your debts can take time, especially if you owe a large sum of money. However it can be of great help to settle smaller debts as it can make you feel like you are getting somewhere. I have made a list of five debts I hope to settle by the end of next year.
One thing I am going to try to do next year is to reduce my expenses even further, and use the savings I make to pay off my smaller debts. Even if it is only saving £2 on petrol, or on my weekly shop I will put that money away and allow it to build up so I can put it towards settling some of my debts.