Do It Yourself Debt Settlement

March 10th, 2010 | Posted in Do It Yourself

Debt companies can help get you out of financial difficulty, but they work in order to make a profit. There are certain situations that you might be able to do it yourself without contacting a debt settlement or credit counselor. This can save you money, but you need to do the research before jumping in. Debt settlement companies have an advantage when negotiating down your debt, because of the relationships they have built with creditors. But that doesnt mean you cant come up with your own plan to get your self out of debt. If you feel that you are up to the task, here are some steps that you can take to be prepared and ready to talk to your creditors.

You need to be proactive and prepare a budget. Figure out what you can pay per month and set up a monthly budget worksheet. This worksheet should show:

1) your income
2) taxes you owe on that income,
3) expenses (food, rent, mortgage, utilities)
4) debt payments (credit cards, student loans, etc)

The more accurate this budget is the better. This will help you put together a plan that you will propose to the creditor when you call them.

If you are expecting the creditors to reduce the amount that you owe them, you want to show them that you have put alot of thought into it and are very serious about paying off your debt. Realize that these companies don’t owe it to you to reduce you debt, so being rude or aggressive will not help your cause.

So before you contact your creditors, you should make a list of the amounts you owe and prioritize them by the amounts you owe (because you are still accumulating interest on these debts).

Call the 1st creditor and be very nice and polite. Make sure you get all their information including a direct line to the person you just talked to. It will be much easier it you establish a rapport with a person and work with them continuously on the problem. They will be much more likely to want to help if they know you and don’t see you as just another number.

You should explain to this person why you are behind on you payments (loss of job, medical issue, etc), what kind of cash flow is coming in now, what you plan is to repay them (this is where the budget comes in handy), and lastly what you can afford to pay them each month.

Propose a lower amount based on what you can afford. Let them know that you want to negotiate your debt or extend your payment. (they do have the right to reject it)

Ask this person what that status of your account is. (They may have passed it on to a collection agency)

If they do accept your proposed lower payment, then you need to get this in writing. Make sure all the terms you agreed to on the phone are on the sheet you receive.

So this is the basic idea of do it yourself debt settlement. Make sure and do more research, before you make those calls. You can also write a letter if you don’t feel comfortable with the call. But a letter is alot less personal and may be less effective.

Good Luck