DAYTON — Calls from debt collectors skyrocketed by 200% last year, according to the Federal Trade Commission.
Many individuals struggling with rising prices may be able to significantly reduce their debt through negotiation.
Consumer reporter Xavier Hershovitz explains how negotiating a better deal can help people save hundreds to thousands of dollars.
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The increase in debt collector calls comes as many face financial hardship.
Sam Fernandez, for example, lost his job during COVID-19 and accumulated $55,000 in credit card debt after his unemployment checks and savings ran out.
Fernandez said he was out of work for probably close to a year. He added that this was the first time it just snowballed, and it got completely out of hand.
The non-profit Money Management International helps people like Fernandez get out of debt.
Tara Alderete, senior director of Enterprise Learning at Money Management International, highlighted the challenges in discussing personal finances.
“Financial wellness is typically not something we discuss. It’s always been sort of a taboo topic,” Alderete said.
She also warned that while credit cards and buy now pay later programs can bridge a financial gap, failing to pay in full each month can trigger steep interest rates, adding hundreds of dollars to each bill.
Fernandez experienced this, noting his monthly interest charges were $700 to $800 a month. He clarified that was just in interest.
Money Management International renegotiated Fernandez’s interest rate from approximately 20% to just 2%, saving him around $700 each month.
Fernandez said his monthly interest payments are now $60 to $70 a month. Alderete advises individuals to contact their service providers or creditors if they anticipate missing a payment or are past due.
“Any time you know you’re going to miss a payment or you find yourself past due, it’s critical to just reach out to your service providers or your creditors. Let them know what’s going on. Ask for reduced interest rates and ask for hardship assistance. What payment options do you have to help me get back on track?” Alderete said.
After asking for assistance, Fernandez is back on track with his debt.
“It’s definitely a huge sense of relief because, you know kind of feels like there is light at the end of the tunnel,” Fernandez said.
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