Managing Debt

Help! I Owe $3,600 in Parking Tickets

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It’s amazing how something small, like a parking ticket, can quickly snowball into something overwhelming. People receive debt collection notices over little things all the time, and while it’s easy to dwell on how the problem could have been prevented, time is much better spent trying to deal with the current issue: a pile of debt and credit problems.

A young adult recently took to Reddit to get the weight of her ongoing debt off her chest. She’s 24, out of work for a year, moving back into her parents’ house and dealing with collection calls regarding $3,600 of outstanding parking, traffic and DMV fines. It’s a complicated situation, emotionally and financially, but there’s always a way forward in predicaments like this.

1. List All Your Debts

You may have a good idea of your outstanding debt, but you’ll never make progress if you don’t know exactly what’s going on. Get your credit report (learn how to get your free annual report here), make a note of your collection accounts, verify them and reach out to the collector.

This may not be easy. Engaging a collector means they’ll want to get you to pay – that’s their job, after all – so prepare yourself to clearly, confidently explain you’re seeking information so you can plan the best way to meet your debt obligation.

2. Negotiate

The Redditor wants to resolve her debts, but she has no job (and can’t drive because of the fines). That makes it difficult to pay debts. She’ll obviously have to get back into the workforce at some point, but her inability to pay the debts is a problem many others can relate to.

By working with creditors and collectors, you may be able to settle your debt for less than you owe. Figure out what you can afford by going through your expenses and bank accounts. If your creditor hasn’t sent your bill to collections yet, see if you can work out a deal (you can negotiate with collectors, too). Do your best to work with your creditor and figure out a way for everyone to get something they want: you out of debt and the creditors with at least some of what they’re owed.

3. Make a Plan & Stick to It

While you’re negotiating, write everything down. Keep all documentation. Once you know what you have to do, whether it’s meeting terms of a settlement or repaying the entire debt, figure out a way to do it. Again, this isn’t an easy path, otherwise you probably would have done it already, but know that getting out of debt takes discipline. Look to the future: Once your debt is resolved, you can focus on developing good habits that will help you avoid falling into debt again.

4. Ask for Help

Most people are embarrassed by debt, but keeping your emotions to yourself could be causing you more harm than coming clean ever would. If you struggle with debt, you need support – not necessarily financial support, because that can mess up relationships – so if you have someone who can hold you to your goals and encourage you to do the difficult things you need to do, ask them to do it.

5. Check Your Credit

If you get to the point of dealing with a slew of debt collectors, you’ve probably had the thought, “I don’t even want to know what my credit score is.” That’s understandable, but it’s also unproductive. You want to know where you stand so when you start to rebuild, you can see your progress. Positive reinforcement works, and if you don’t see the improvement you hope for, you’ll realize something needs to change. It doesn’t cost anything, either: You can review your credit data for free and receive personalized tips for boosting your credit score through Credit.com.

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