In a perfect world, there would be lots of nice things for everyone and hardly any problems anywhere. Anyone old enough to be reading this article certainly knows that the tooth fairy doesn’t exist – but can’t many of us remember a time when we believed it did? Same goes for Santa Claus, right?
Some of us believed for a little while, didn’t we? Some of us may have wished for a pony when we were kids, but never really did end up with one. A few of us may have wanted to grow up to play centerfield for the New York Yankees. We know how that one worked out.
So, to this list of statistically improbable fantasies, we now add this question – can you eliminate debt without paying? However, in this instance, while it may appear far-fetched, there are some ways you can get rid of debt without paying it. Here are some tips to eliminate debt without paying.
Can You Eliminate Debt Without Paying?
Believe it or not, in some instances it actually is possible to get rid of debt without paying. Because there are many different types of debt, this opportunity won’t be available across the board. However, when it comes to student loan debt, there are some ways to get out of debt without paying.
For example, income-driven repayment plans reduce monthly payments down toward 10-20% of income levels before eventually forgiving the remainder of the loan balance – but not until after the borrower has made at least twenty years of monthly payments.
Things are a little better for public service employees at the federal, state and local level who work for a qualifying employer. Following ten years of monthly payments, the balance on Federal Direct student loans is forgiven. Meantime, for those teachers who work five years or more at a low-income elementary or secondary school, there is teacher loan forgiveness of up to $17,500 on Direct Loans and Stafford Loans.
There also are Perkins loan cancellations for eligible teachers, firefighters and police officers who make timely monthly payments for at least five years. Obviously none of these solutions are instantaneous – but they do offer debt relief to those who qualify and are patient.
How To Eliminate Credit Card Debt Without Paying
When we shine the light on how to eliminate credit card debt without paying, things look a bit different. For starters, for those individuals who are contemplating simply not paying their credit card bills, you should know that there are consequences that begin brewing almost immediately after you miss a payment.
Late fees, damage to a credit score and profile, penalty APR after two missed payments, higher finance charges – things can get expensive in a hurry. And that’s before your account winds up getting written off and sold to a collections agency that makes it their business to chase after you for the money you owe. Don’t go down this road, unless you don’t mind inviting extra stress into your life.
Ultimately, each state has a statute of limitations for how much time creditors and collections agencies have to sue you for credit card debt, (an “open-ended account”). This is usually between three and six years – but it can be for as long as ten years.
When a debtor gets sued after deciding not to pay credit card debt and prior to the statute of limitations lapsing, the debtor usually loses. A court ordered judgement follows for the amount owed with interest expense, along with possibly attorney fees for the other side, court costs…in other words, a multi-faceted nightmare. Thankfully, there are better options than flat-out skipping out on your credit card bills.
Debt settlement takes place when a debtor successfully negotiates a payoff amount for less than the total balance owed. This is one way to eliminate some debt without paying. The lower amount is agreed to by the creditor or collection agency and is fully documented in writing.
Debt settlement focuses primarily on unsecured debt, such as credit card debt, personal installment loans, medical debt and student loans – and if you are in the situation of having already fallen delinquent on some credit card accounts, it can be an opportune time to pursue debt settlement.
This is because creditors become more likely to settle for less than what is owed when a debtor has already demonstrated an inability to pay.
When accounts move closer to charge-off status, creditors are well aware that they are less likely to recover anything significant from the account again and recognize that a smaller piece of the pie is better than no piece of the pie at all. Contact the debt settlement specialists at United Settlement today to discuss debt settlement and find out whether you can get out of debt with no extra money coming out of your pocket.
If you’re looking to get rid of debt without paying, bankruptcy should be looked upon only as a last resort – as it causes significant damage to a credit score and profile.
Bankruptcy is a legal procedure that allows individuals to discharge debts when they have become insurmountably high, thereby providing those deep in debt with the opportunity of a fresh financial start. Bankruptcy is an extreme answer to the question of how to get rid of debt collectors.
This is because debt collectors are prohibited from pursuing collection activity while a bankruptcy case is pending, and cannot collect on a debt after it has been discharged. Furthermore, the emotional relief that results from removing the stress of massive debt is often worth the consequences.
What are the consequences of bankruptcy? Bankruptcy will remain on a credit report for at least seven years from the filing date, impeding an ability to obtain new lines of credit while also potentially harming your reputation to potential employers and landlords who may view your credit report. However, with careful planning and subsequent responsible debt repayment behavior, it is possible to work toward rebuilding a healthy credit score and profile over a period of several years.
About the Author: Steven Brachman
Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.