It is always possible to negotiate with creditors ? even if they have already taken you to court to get a judgment or to garnish your wages.

Getting a creditor to reduce your monthly payment helps and does provide short-term relief. However, this is only a temporary measure and you need to remember that the interest on your debt will continue to pile up.

You need to negotiate settlements with your creditors to get real debt relief and fix your credit.

Let's take credit card debt first. Suppose you owe $4,000 but that the original amount was only $2500 and the rest is interest. Let's also assume you have been behind in your payments for six moths. Call the company and explain the reason why you have fallen behind. You will need to have a real reason such as illness or the loss of a job. Agree to pay $2500 as a settlement in full. In turn, have the company agree to report your account as current to the credit reporting agencies.

Most creditors will buy off on this kind of settlement because they'd rather get the money now vs. having to wait many months or pay a collection agency. So you should be able to negotiate this kind of settlement with many, if not all, of your creditors.

However, some creditors will elect to take you to court to get a judgment. A judgment is a court order stating that you must pay the amount owed. It gives the creditor the right to garnish your wages or seize your assets, including your bank accounts.

Even if a judgment proceeding has begun, there is still time to negotiate a settlement. You can approach the creditor's attorney (or have your attorney approach the other attorney) and make an initial offer of 40 percent to settle the case. You will probably have to go up from the 40 percent. However, a settlement may be attractive to the creditor because it saves the company attorney's fees and the cost of seizing your assets or garnishing your salary.

If you do reach a settlement with a creditor, be sure to receive proof of payment. Also, don't send any funds until you have a legal document that spells out the terms of the settlement. Keep a copy of this document. Make the payment as agreed and then request that the creditor provide you with a receipt or some other proof of payment.

Some creditors, especially contractors and subcontractors and the IRS, can file a lien on your property. A lien is a court order that gives the creditor an interest in a piece of some real property you own such as your home. When you sell the property, the creditor will be paid what he or she is owed out of the proceeds of the sale. Once a lien has been placed against your property, the only way to eliminate it is to pay or reach a settlement with the creditor. If it is the IRS that filed the lien, be sure to get a Certificate of Release of Federal Tax Lien when you do pay it off. Negotiating with creditors may not be much fun, but it can help you get out of debt and repair your credit.

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