Despite advertising to the contrary by some debt settlement companies, you are well-positioned to settle your own debts with your creditors. In other words, there is no need to pay a lot of money to a debt settlement firm to negotiate for you, and DIY debt negotiation means that you’ll have more money to put toward your debts. You can get out of debt faster by settling your unpaid bills yourself.
However, you’re more likely to settle your own debts successfully if you have a clearer understanding of the settlement process and know how to make it work for you.
I am here to support your do-it-yourself efforts with information, advice and encouragement found throughout this site. You also have access to one on one coaching, and even full service debt negotiation. But I believe that anyone inclined to settle debts on your own should take that path first.
Let’s get started with the basics of debt settlement.
Something is often better than nothing to banks and debt collectors.
Creditors understand that a certain percentage of the consumers they extend credit to won’t be able to repay what they owe. Banks set aside a reserve for losses as a result of defaults, but they also want to minimize the amount of those losses. One way that many banks will try to lose less on debts that go unpaid is to agree to settle for less than the full amount owed.
Each creditor will have it’s own policy regarding what it will settle a debt for. For example, you may find that you are able to save 60% with one creditor, but only 45% with another. Read more about why banks settle debt.
Something that often goes under appreciated – when negotiating your bills for a lower lump sum settlement – is timing.
The creditor you’re negotiating with may reject your offer, maybe because it’s too small, in which case you may want to increase the size of your offer, if you can afford to. It’s also possible that your offer was rejected because you’re off on your timing, or because there was irregular activity on your account prior to your default.
For example, before you stopped paying on the account you tapped it for large cash advances, used it for balance transfers, or you suddenly began using your card much more than you had in the past. Of course, some creditors may simply refuse to settle with you, in which case you’ll have another shot at settling if your account is sent to a debt collection agency, or sold to a debt buyer.
Try settling debt yourself, and sooner rather than later.
If you are going to negotiate with an original creditor (the lender that extended you credit), you usually want to do so before the account is more than six months past due. Otherwise, you’ll often have to try to negotiate a settlement with the collection agency that your creditor may hire to collect your debt, or with the agency that may purchase the debt.
Who is collecting your debt can often impact how low your settlements can go on different accounts. You will want to identify the creditors that offer the best savings the earliest in order to get the most from your available money.
It’s also possible that after the six months are up, your creditor will give your debt to an attorney who is authorized to sue you for the money. Sometimes you will want to settle with more aggressive debt collectors earlier, so it is important to know who is currently the hardest to negotiate with, and how time is sometimes going to be a factor.
Time, or lack thereof, is one of the key reasons why DIY debt settlement is the way to go.
Complexities do exist when negotiating and settling debts. The more accounts you have – the more strategic you will need to be in how you prioritize – so that you maximize savings and defer risks.
I cover all of these topics on this site.
DIY debt negotiation offers flexibility.
Although settling a debt is not difficult, when you take the DIY route to negotiating debts yourself, you can end up feeling frustrated or unsure about what to do next. That’s why having the support and assistance of a site like this one can be so helpful. You get to learn from other people that have gone before you, and also get feedback from debt relief experts.
You can work one on one with someone in the network in order to make sure that you understand the details and nuances of the process and provide encouragement and support when you need it. It is good to know when you should bend this way, or that, and when to stretch to reach a settlement that you would otherwise not want to miss (no better low balance offer is likely to come). I would not offer to coach you through DIY debt settlement off line if I thought the website was the only tool anyone needed. DIY debt settlement is not for everyone (though I have changed many peoples opinions about this), and if it is not for you I would encourage you to request a consult with me.
This site provides you with all of the information and tools needed to settle your own credit cards, and other bills, and often as well as anyone could negotiate the debts for you. Anyone with questions or concerns about how to get started with settling your debt yourself is welcome to post in the comments below for feedback.