Do-it-yourself debt negotiation
For many people, perhaps the the best option is do-it-yourself credit card debt negotiation.
It can save a great deal of money in fees that would otherwise be paid to a credit counseling agency, debt consolidation specialist, or settlement negotiator.
However, doing so takes a great deal of research and preparation. It also takes tenacity and the ability to stay calm in the face of debt collector tactics.
If you decide to negotiate directly with the creditors, you will need to what sort of reductions in principal and interest are reasonable, given the amount and age of your debt.
Researching this information can be time consuming and even a bit frustrating, but it will well worth it once you get on the phone or start composing letters to negotiate with creditors.
On way to save yourself a great deal of time and effort is by using the services of a do-it-yourself debt consulting company.
These companies can offer great support and guidance that will give you all the information and training you need to confidently negotiate your own settlement.
The price tends to be far less than the fee charged by debt settlement firms, so it is possible to save hundreds or even thousands of dollars this way.
Going it alone
Ultimately, if you choose to go it alone and negotiate directly with the credit card companies, it pays to do your homework first. You need to figure out:
- The maximum total amount you can safely afford to pay each month for all your credit card bills.
- The total amount of principal you owe for each card (that is, NOT including all current and past interest).
- The total amount of cash you can come up with.
This last item should include ALL sources of cash - savings, loans from family members (and even friends) - be creative.
If you are going to negotiate with creditors, they are most likely going to ask for cash up front.
In any event, you are most likely to get the best settlement deal if you can make one lump-sum payment.
Be forewarned
Creditors - credit card companies and the likes - are unlikely to be willing to negotiate a settlement on a debt until it is considerably past due, as in a year or more.
In fact, in all likelihood, after the initial round of phone calls and threatening letters has run its course and a year or more has passed, you might well receive settlement offers from the credit card companies.
These offers tend to grow better as time passes. For instance, the first offer might be to reduce or eliminate interest. And by the third or fourth offer (assuming you have ignored or refused the previous offers), they might be proposing to reduce your principal owed, say by 25% to even 50%.
Of course, whatever they offer, you are usually best off if you submit your own reasonable counter offer.
So if they propose eliminating all interest and late charges and fees, you could counter by proposing a payment of 75% of the principal, or whatever you can realistically afford. Remember, they can only say no. And the longer your debt has gone unpaid, the LESS the creditors tend to be willing to settle for, as a general rule.
So if you are already a year or so past due on your payments, you would be wise to consider this method of debt settlement.
Preparing to negotiate by yourself can be pretty intimidating and takes a good deal of research to make sure you are aware of the relevant laws and regulations.
There is a company, Zipdebt, that offers some excellent resources to help you learn how to negotiate your own settlement.
They offer several levels of support at what I think are very reasonable prices, and the packages even include one-on-one phone consultation with a debt negotiation expert who can answer whatever questions you might have and help you clarify your game plan.
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I think do-it-yourself negotiation can be a great option that is much cheaper than hiring a debt negotiator. Zipdebt gives you the knowledge and support you need to make sure you are handling the negotiations in the right way.
After all, you only get one shot at it. Make sure you do it the right way.
Remember, settlement can adversely affect your credit, so this factor must be taken into account. But large outstanding debts are terrible for your credit rating too, so it is often better to reach a settlement, and then move on to REBUILDING YOUR CREDIT.