DIY Negotiating Debt Settlement

DIY negotiating debt settlement can seem intimidating, but with a few good tips, it isn't that hard to do!

If you are in a really bad financial situation, and you are unable even to just make minimum payments one month, don’t worry. You can negotiate your debts, and pay back much less than you owe.

As long as your creditors get the agreed amount in the end, they won’t expect you to pay the original amount due when you just can’t afford to.

Settling debts takes an investment of time and may seem intimidating. If you do it, though, you’ll be surprised at how kind your creditors (that is, the people you owe money to) can be. Look at it as a kind of credit card debt settlement program initiated by you!

You might not want to, but if you can’t afford to pay on your credit card, you need to close the account. To do so, you can negotiate a ‘payment plan’ with the card company.

A payment plan turns your credit card debt into a loan. The good news is that the company might take as much as 50% off the amount that you need to pay back. Strange as that may sound, the truth is that they are happy that you are paying anything.

There are a lot of people who don’t pay at all and have to be pursued, which costs creditors time and money. They would much rather hear from you if you’re having trouble, so don’t ignore them.

It is in your creditors’ best interests to consider whatever you can offer them, within reason. Their alternatives are lengthy court proceedings and hiring collection agencies to try to collect from you.

They know that your offer is probably the only one you will make before you do something more extreme, so they are usually open to accepting it as long as it is within reason.

You can use the telephone to discuss the situation with your creditors, but do keep notes and confirm the gist of your conversation by mail or email. You need a paper trail for your files.

Here is a sample debt settlement letter that can be used:

Dear Sir or Madam,

I regret to inform you that I can no longer afford to make my minimum payments of $x per month on my credit card account with you (account number #####). I would like to request the closure of my account, followed by the settlement of the debt on a monthly payment plan. Please advise what kind of terms I could expect from such a plan.

Very truly yours, etc.

You will rarely be able to negotiate your debts without damaging your credit report.

Tips to help your credit reports

If you can pay a larger portion of the outstanding debt, see if you can persuade the creditor to say that it was paid off to their satisfaction rather than recording it as their acceptance of less than they wanted.

You need to decide how important your credit report is to you. If you are planning to apply for a large loan in the near future, this is something to consider before undergoing any debt settlement programs.

What if you don't want to do it yourself?

You can work with a recognized leader in debt settlement negotiations. Take the first step to eliminating your debt and taking back control of your financial life. Learn more ...

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