Do it yourself debt settlement and negotiation
For many, a viable option is do-it-yourself 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.
[Please note this is not legal advice - for that you must consult with an attorney.]
If you do decide to investigate do it yourself debt negotiation, you should know that doing so so takes a great deal of research and preparation. It also takes tenacity and the ability to stay calm in the face of debt collection 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 can be well worth it in the end. In fact, NOT properly preparing yourself for negotiations with creditors is almost a guaranteed path to failure.
Of course, doing the research on your own is one way to go, but it can be incredibly time consuming and frustrating.
An alternative approach
An alternative is to get help from a company that can offer support and training to teach you to negotiate your own settlement.
This approach tends to be less than the fee charged by debt settlement firms, so it is possible to save a bunch of money this way, but it does take more effort on your part.
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 - might be be willing to negotiate a settlement on a debt unless 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 can sometimes 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, it often makes sense to submit your own reasonable counter offer.
So, just as an example, 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 might want 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.
One of our advertisers, Zipdebt, offers a rather unique service that provides you with 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 questions you might have and help you clarify your game plan.
You can download Zipdebt's FREE 32 page report by CLICKING HERE. This report details how you can quickly eliminate your debts WITHOUT filing bankruptcy.
I think do-it-yourself negotiation can be a great option that is much cheaper than hiring a debt negotiator. But it is essential to make sure you are fully prepared before attempting to go this route.
There is a lot of great information available for free online that can help you learn how to negotiate with creditors. So whether you decide to get help from a debt relief specialist or go it on your own, it really pays to spend the time learning your rights and researching the right way to approach your creditors.
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.