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Tips to avoid being placed for collection

By Michelle Dunn

If you try to use your MasterCard to pay off your Visa, need to decide which bills to pay and which to let slide or have to much month left at the end of the money, you may need some help getting your finances in order.

Take a moment and list all the companies and people you owe money to. Add it up exactly to find out how much you owe. When you know how much you owe in total and to whom, add up the payments you have to make this month. Then add up all the money you will make this month, including salary interest on accounts, anything you can count on receiving. Then subtract the amount of money you will need to pay rent or make house payments and pay the electric bill or phone bill, or for food, do you have enough money left to make all of your payments this month?

If not, you will need to decide what to pay right way and then plan how and when to pay the others.

The first step to take when you discover that you will not be able to make a payment on time is to contact your creditor, or the person to whom you owe the money, IMMEDIATELY! Explain to them your financial situation and set up a payment plan you can afford. Your creditor is more likely to understand and helpful if you contact them rather than ignore them and become overdue without an explanation.

You can also try to come up with some extra money you might not have considered, such as savings bonds, or stocks that can be sold. Maybe have a garage sale or list large items in a local paper for sale. Another way to discover money is to decrease your expenses, try bringing your lunch to work rather than eating out.

Keep track of all the money you spend. You can write down every time you purchase something in a notebook, you will be surprised at how much this can add up to! It also helps curb spending, since you will think before you purchase, I will have to write this down.hmmm do I really need this? You will never ask again, "Where does it all go?"

If you do have an account placed for collection remember that debt collectors are trained to solve payment problems. Be honest with the collector about your inability to pay or not to pay and make a payment plan and stick to it. Always communicate with the debt collector. If you are not able to make a payment, call and let them know. 

If you try all of these ideas and still have problems, maybe you should consider calling a non-profit Consumer Credit Counseling Service.

 Michelle Dunn is the author of "Starting Your Own Collection Agency" and  "MAD Collection Letters and Forms." She owns and operates MAD Collection Agency. Visit her site ay or her online credit and collections community at

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Category:  Money

Related Links | BudgetingCreditDebt |
| Identity Theft
| Investing | Retirement |

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