Published On: Sun, Jul 10th, 2016

The Debt Repayment Mistake That Cost Me Over $5,000

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I have done this myself, but no more. I'm ready to SLASH through my debt now that I know about this! #debtfree #personalfinance #debt #moneymistakesIf you are in debt and you are paying it down ahead of schedule, you’d assume that you are being successful in your debt repayment journey, right? Well, as someone who’s climbed out of over $120,000 in debt, I can look back now and say that I could have done a few things differently. The biggest mistake I made was not knowing the rights I had as a debtor to either negotiate, challenge or understand the circumstance under which I don’t have to pay a debt.

I can think of two specific types of debt where I might have acted a little wiser.

1) Really Old Debt

My husband possessed a private college loan that was over 15 yrs . old. In my own frenzy to escape debt, I approached the school to work out the $12,000 charge down (about $8,400 was interest.) I thought I had been so best if you offer them $3,000. They returned and said they might need at least the main balance around $3,600. I used to be stunned by my negotiating knowledge. I put just kept us $8,400! Or performed I?

Little did I understand, the statue of restriction on that debts possessed handed and officially we didn’t need to pay! The statue of limitation when it comes to debt means that after a degree of time just, a debtor cannot sue you for a debt. The quantity of time varies from condition to state. They could try to collect onto it, but there’s very little else they can do. A lot of people opt to securely ignore this kind debt without the effect on their credit file or immediate finances. If you old debt, take a look chart away to see whether it’s at night statue of constraints for the state of hawaii your home is in: http://www.nolo.com/legal-encyclopedia/statute-of-limitations-state-laws-chart-29941.html

At the ultimate end of your day, I am not terribly annoyed that that people paid it off. We actually did contain the methods to pay without doing broke, so we did. But periodically it might seem sensible to take good thing about laws that provide you an escape based on your own situation. You never want to omit out of arrears you owe however in extreme circumstances you might have to obtain a break.

2) Debt Gone to Collections

In our more unstable days, we did have some debt that went to collections. It was the kind of scummy debt that people typically negotiate down pretty easily: gym memberships, cell phone bills, etc. I didn’t know that once a debt is in collections, the collector is really happy to receive any payment (within reason.) This gives you, the debtor, an opportunity to negotiate a debt down. In the beginning of our debt repayment process, I paid full balances to debt collectors, until I got hip to the game. If I could go back to the beginning, I would try to negotiate any debt in that went to collections.  I think I overpaid on this debt by about $1,500.

As I mentioned in another Principles of Increase post, many times debt can change hands and the original amounts and promissory notes are not in the creditor’s file. This leaves a lot of room for error. Balances can be padded, inflated and just plain made-up. So, don’t feel bad if you have to negotiate this kind of debt downward. The amount you are being quoted could be wrong anyway. (Debt collectors don’t have the best record with accuracy.)

Don’t Make Any More Debt Repayment Mistakes

I made these mistakes, but you don’t have to. If you are in debt you desperately want to get out of, here what I recommend:

  • Get some guidance and support in this process (mostly free or low cost.) If you want to get out of debt, the first thing I would recommend is getting a copy of Total Money Makeover, by Dave Ramsey. This is the plan we used to get out of debt. It will help you avoid amateur debt repayment mistakes like the one I made.
  • Find a support system of like-minded people who will help and encourage you on your journey. I’ve got a FaceBook group that you can join. But there are countless forums, discussion boards and meet-ups centered around debt dumping you can participate in as well.
  • Finally, firm up your commitment to get out of debt by drafting a plan. I’ve got a FREE five-day email course you can take that will help you get this plan going. Once you get that in place, you’ll have the next steps and resources at your finger tips for a successful debt repayment journey.

Enter your information below to get instant access to your FREE email course:

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Aja McClanahan

Aja “A.J.” McClanahan is a writer, speaker and entrepreneur.

Source: Principles of Increase

Aja McClanahan

Certified Salesforce.com Developer, Writer & Udemy Instructor at Principles of Increase
CRM and database administration for sales & marketing organizations or departments. My clients have included mainly small businesses and non profit organizations.

Specialties: technology & sales consulting, CRM deployment, salesforce.com, content management, brand development, general sales & marketing, social media and interactive marketing.

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About the Author

- CRM and database administration for sales & marketing organizations or departments. My clients have included mainly small businesses and non profit organizations. Specialties: technology & sales consulting, CRM deployment, salesforce.com, content management, brand development, general sales & marketing, social media and interactive marketing.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study