Meryl Yourish has an article on dealing with credit card debt which emphasizes something I've noticed: people don't realize they can negotiate with creditors. They'll let a credit card go into default and spend their days dodging collection calls rather than picking up the phone, worming their way through the customer service tree to a manager, and laying out their financial problems in a calm and measured voice. If a company balks, you don't say, "Oh, well, I guess I'll default, then"; you call again, multiple times if necessary. You casually mention that you're worried that you will have to declare bankruptcy if you can't get an adjustment. You let the credit card company know--calmly, without threats, but as a simple statement of fact--that if they don't work out a deal, that doesn't mean they get to make fat profits off of your late fees and penalties. If they don't deal soon, they are going to have to shell out for a lawyer to attend your bankruptcy hearing if they want to collect anything.
People seem particularly afraid to negotiate with medical providers, even though these are absolutely your most accommodating creditors. The solution to a huge unexpected hospital bill is not trashing your credit rating by "forgetting" to pay; it's going down to the billing office, explaining your situation, and negotiating a discount and a payment plan.
Even people who have defaulted usually don't do the obvious thing, which is to save up some fraction of the balance (usually 20-50%) in cash, and offer to settle.
For a nation as gleefully fond of credit card debt as we are, we have a curiously passive attitude towards dealing with creditors. You cannot make $50,000 worth of credit card debt go away with just a big smile and a good negotiating technique. But for the price of a few phone calls, you can usually measurably improve your financial picture.
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