Melody Brooke
Brooke, 55, got out of debt by negotiating with her credit card companies.
Strategy: Negotiate your debt
Advice: If you can't pay, don't. Or you'll just get yourself into more trouble.
I settled $110,000 of debt just by negotiating with my credit card companies.
My husband and I had put a lot of money on our credit cards when we tried to start a side business that helps people plan trips online. My husband had already quit his job when we realized we would have needed close to half a million dollars to make the business successful.
We started to have a tough time keeping up with our six credit cards. After making a late payment on one of the cards, I knew there was just no way we could keep up with everything anymore, so we quit paying all of our cards while we tried to get ourselves back together.
We went without paying for six months and were getting calls from collectors, who told us we were doing this deliberately and calling us the rottenest people on earth. For a while we stopped answering because we knew there was nothing we could do. But one day we decided to answer and find out if they were willing to negotiate. At first they said we could pay 75%. We told them we just didn't have that kind of money. Then they came back with 50%, and we said sorry again. Eventually they just wanted to get it off their books so badly that they settled for around 30% of the original debt.
We ended up only having to pay a total of $39,000 to the three credit card companies we had cards with. Because the amount the credit card companies write off is often reported to the IRS as income you have to pay taxes on, we got a little behind on our taxes, but it still ended up so much better than what would have happened if we had kept trying to pay our cards. Once we finally negotiated, everything in our lives seemed manageable again.
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Last updated October 21 2010: 12:29 PM ET
