Account balance has increased

When you decide to resolve your debt, it is common that your account balances will increase before you are able to negotiate a resolution.  It is very important that each time you receive a statement or letter from your creditor that you update all information in UGotiate.  The experience you have with UGotiate will be greatly enhanced by updating your balances regularly.  Your goal, in using UGotiate is to resolve your debt.  Part of what UGotiate does is to keep track of your creditors and send you alerts to a possible settlement or to when it may be time to begin negotiations.  In order to provide you accurate alerts, you must keep your creditor’s balance updated.

Why are my balances increasing?

This is one of the most common questions consumers have when they decide to resolve their debt.  It can be confusing, for sure. Let’s think about it:  You have made the decision to save up as much you can each month in order to eventually resolve your accounts for less than you owe.  In the meantime, all of your accounts are still charging fees and high interest.  How will it ever be possible to resolve your accounts when the balances keep increasing?

Change how you think about your debt: Ask yourself:  how were you handling your debt in the past?   How long have you been struggling with this debt?  For most consumers with credit card debt, they have been struggling for quite some time – years usually.  And most consumers are barely able to make the minimum monthly payments that the creditors require.  During the time you were struggling, you were being charged the same interest and fees that you are now.  Unfortunately, interest and fees do typically do not stop until the account is paid off (in full or in an agreed to resolution).  There is no way to avoid it.

You may be wondering why you didn’t notice the interest or fees in the past or why your balances weren’t increasing before.  The difference now is that you are no longer making monthly payments.  When you were making payments, the account balance may not have increased each month because the amount you were able to pay was applied mostly to interest and fees so your balance either stayed the same, or reduced slightly.  Even if you didn’t decide to resolve your debt, the same about of interest and fees would still be added to your account – it is just more to you noticeable now.

Remember, you have chosen to negotiate with your creditors to resolve your account for less than what you owe.  If for example, you are able to negotiate a 50% settlement on your debt.  This means that you save 50% of the balance.  The balance is made up of your principle (what you actually charged), interest and fees.  So, by resolving your account for 50%, you don’t end up paying all of the interest and fees on your account. 

Huge savings in future interest: One very important savings fact most consumers don’t even think about. If you continued to pay your creditor minimum payments, you would be paying interest until the account is paid off – which could be 30 years or even more, depending on the size of the debt, interest amount and your monthly payment!  Think about how much you will save by not paying that interest over the next few decades!  That in itself is reason to not worry if your balances increase while you are saving up to resolve your account.