DEBT MANAGEMENT

Balance sheets and income statements are the statements which are vital for you to understand what is going on, but more importantly, they show your creditors your financial picture. They are important and simple tools to cut your debt. If there is no money, there is no money; plain and simple. Neal was in debt for $50,000. He had two credit cards. The amount that he spent, plus all the accrued interest and penalties, had him so deep in debt that he would never be able to pay it off. So that is exactly what he showed his creditors. Neal was being hounded by a collection agency, so he got his friend, an accountant, to draft his personal financial statements. In black and white, on only one, the balance sheet and income statement clearly showed that he had nothing, so he was able to pay nothing. Nothing from nothing leaves nothing.

He sent the statements and a letter the collection agency, telling them that they were wasting their time, because he absolutely could not pay the $50000. The collection agency had bought the debt for pennies on the dollar, so by giving them a penny more, they make a profit. Neal’s phone calls and letters, along with the hard facts on his financial statements, convinced the collection agency to negotiate. Neal settled for $14000 on his $50000 debt. That is nearly a 75%$ reduction. Financial statements are a great technique for reducing debt with credit card companies, too. Show that you have no net worth, or a negative net worth. If the creditor can clearly see that you have nothing, they may be willing to settle. You don’t need an attorney to do this. You can do this yourself. Take a look at the statement in the appendix and fill in your numbers. This is a technique that can work for virtually anyone.