Negotiation/Offers: You can try to work out modified payment arrangements with your creditors. If your creditors are local lenders or medical providers, this may be a possibility. If your creditors are out of town banks or credit card companies this will make negotiation more difficult. If you do make such an agreement, make sure that it is in writing. Another option is to set money aside and make a lump sum offer to pay the debt for less than the total amount owing. Some lenders will accept this lower amount if it is paid all at one time. Again, you should have any such agreement in writing. Also, you need to be aware that any amount of your balance is reduced is taxable income to you, and that the creditor is required under federal law to issue you and the IRS a statement as to the amount of debt that was forgiven and this may raise your tax bill the following year.

Credit Counseling: These are organizations that will provide you with counseling on the use of credit and negotiate with the creditors on your behalf to try to lower payments and interest. The success of such a program relies on cooperation by your creditors, as the acceptance of these reduced amounts is voluntary on their part. Rather than entering into a program with an out of state organization, we recommend that you consult with Consumer Credit Counseling Service of Central Illinois (CCCS) whose local office for your area is generally in the yellow pages.

Home Equity/Consolidation: If you have equity in your home, it sometimes makes sense to transfer high interest rate debt to a second mortgage on your home, at a lower rate and with deductible interest. Be cautious about the lender that you choose, and be cautious about hidden fees. You should also be sure that you will be able to make the new mortgage payment otherwise your home could be lost. If you do not own real estate, some lenders may be willing to make an unsecured consolidation loan to you -- but the rates for these types of loans are generally very high.

Call our office for a free, no obligation office consultation to have your further questions answered and to discuss your options. Call our office at (309) 673-5535 or (800) 248-7212.