Finances

What To Do After Your Debts Are Settled

The day your debts are settled is one of great joy and relief. After all, some weight will be removed from your shoulders. Your life is going to be more relaxed, and free of collections calls, emails and text messages.


Long story short, you’re finally going to be back on the road to a better-quality financial existence. However, what you do afterward will determine how long you get to stay on that road.

Here’s what to do after your debts are settled.

Save Your Documentation

While uncommon, there have been instances of creditors coming back after a debt settlement. Among the reasons for this is the practice creditors have of selling debts. In many cases, your original creditor will have sold your debt to a collection agency and exited the scene.

All this new company usually has is a spreadsheet containing your name, contact information, and the amount you owe. This means it could mistakenly come after you.

Keeping all of your documentation to prove your debt was settled will be your best defense in this situation.

Review Your Credit Report

After a month or so, request your free annual copy of your credit report and confirm all of the debts you settled were cleared off of it.

If any of the debts are still there, contact the creditor(s) to let them know the debt was settled and also insist this fact be reflected on your credit report.

Rework Your Budget/Save

With the settlement payments out of the way, you now have more disposable income. The first thing you should do (if you haven’t already) is to establish an emergency fund.

Use all of the money you’ve been putting toward your settlement program to open a savings account and feed it each month. This will put you in a good position should unexpected expenses arise.

With cash on hand, you can avoid going back into debt to deal with them.

Avoid New Debt

Regardless of how your debt situation arose, the bottom line is you needed relief because you found yourself in an unmanageable situation. Having achieved debt relief working with an organization like Freedom Debt Relief, only to do the same thing again, is sheer folly. Set a budget with which you can comfortably live with and stick to it.

Think carefully before spending on big-ticket items. Will it ultimately save you money? Will it help you make money? If the answer to either of those questions is no, you probably don’t need it.

If you’re prone to frivolous spending, close your eBay account, stay off of Craigslist and also cancel your subscriptions to catalogs and the like.

You don’t need the temptation.

Use Credit Cards Carefully

Chances are you’ll still have a couple of credit cards after your settlement program is complete. You’ll need to make occasional purchases to improve your credit score. However, it is imperative you change the way you use your cards.

Charge only as much as your budget will permit you to pay in full before the card issuer’s grace period expires. This will keep you out of debt and raise your credit score at the same time. Under no circumstances should you let a balance roll over into a subsequent month.

You’ll remain on the path to financial freedom if you’re careful to observe these practices religiously. You’ll have the money you can use to generate savings, and you’ll be in a better position to deal with emergencies in cash.

About the author

About the author

Mike Taffet is a stepfather of three children – two boys and a girl. He enjoys writing about several topics, especially, finances, stepparenting, and the blended family. Mike and his family call Florida home, and he’s a huge Atlanta Braves fan.

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