Debt Views

Bad debt is often like a ball and chain around your leg which can drag you down. Keeping in mind there is a difference between good debt and bad debt. Bad debt is something that you borrow to acquisition goods that will depreciate in value or non tax deductible, that is a car, holiday and clothes. A good debt you borrow for goods that go up in value and ideally are tax deductible debt, that is a quality property or share portfolio.

If you are in insurmountable debt, you can use the following strategy. These days though it may be better to use debt agreement and management companies to arrange your affairs.

The following is a sample letter you could use as a guide in drafting your own letter to your creditors

Dear As you know, I am in debt to you for $__________, and I intend to pay you in full, plus interest. In order to achieve this goal, I have been devising a plan during the past few days to put myself in a stable financial position. To this end, I have opened a “Debt Clearance Account” and twenty percent of my income is going directly into that account. That will enable me to have sufficient resources to live on, without worry or stress, and it will prevent me from falling further into debt. Each week (or month) you will receive a cheque for $________ from my “DCA”, until my account with you is clear. I am aware that this is not the figure I had previously agreed to pay you, but I am sure you will be understanding and appreciate what I am doing. If you have any questions, please feel free to contact me. I am quite excited about my new plans, and if you would like to have me review them with you so that you might help others who are in your debt, I would be pleased to do so.

Thank you in advance for your kind co-operation. Have a wonderful day!

Sincerely John Doe

Keep in mind that your letter to your creditor is a statement of fact and not a request – you are in charge of your finances, not your creditors! Be sure to neatly type your letters and enclose your first new payment with your covering letter. Understand there is an “outside chance” that some people are unreasonable and will not want to co-operate with you. They might even go so far as to phone you, and attempt to intimidate you, with threats of taking you to court, etc. But hold your ground because there is no court in the country that would not congratulate you, when you explained your entire plan for Financial Independence. Moreover, you will find that 95% of the people whom you write to will be most co-operative.