Want to settle your own credit card debt? That is possible. While the norm is to hire a debt expert or a lawyer to help out in debt settlement, there are some brave souls who decided to work on this alone. After all, hiring professionals will entail an average service fee of 25% of the total debt or settlement amount.
While the savings may be a good enough reason not to hire a professional, you need to know that negotiating with creditors can be frustrating and intimidating. This is most true when you are already dealing with third party collectors. Creditors are still somewhat concerned about their relationship with you as a consumer because after all, they still need you as a returning client. On the other hand, collectors are strictly in the business of going after defaulting debtors. They do not care about customer relationships.
If you think that you can handle the stress and you have the negotiation skills, here are the steps you need to follow when conducting your own debt settlement.
First of all, stop paying your creditors. You want them to think that you are in a financial crisis and one way to show that is by defaulting on your payments deliberately. That does not mean you will spend that amount on anything. You need to put that aside, preferably in a separate account, where you will grow it as your settlement fund. You will use this later on as a bargaining chip to get your creditor to agree on a settlement.
As the months go by without any payment from you, creditors will start calling. This is usually after the first 30 days since your last payment. At first, they will be polite as they ask you to pay your dues. But as it gets longer, they will become more aggressive and even harassing. When a few months have passed, the credit card company will pass your account to a collector. This is when things will get uglier. You will find yourself threatened and this is where some people start to break. Collectors will use all means possible to force you to pay. They will even threaten you with a lawsuit or jail time.
As the calls become nastier, you should keep your cool. Ignore the threats and read about your rights as a consumer. You can find out what they are through the Fair Debt Collection Practices Act (FDCPA). Even if the collector threatens you with a lawsuit, they are really hesitant to do that. If you are in a real crisis, the courts may decide to discharge your debts and they can end up with nothing.
During your conversation with creditors and collectors, keep mentioning bankruptcy. Tell them that you do not have money and what little you have is barely enough to cover your daily needs. When the 6th month mark comes, start offering to settle. Say that if they do not settle, you may have to file for bankruptcy. Do not be demanding and show hesitation to declare that you are bankrupt.
Continue negotiating until you reach a settlement. In some cases the collector will make the first offer to settle. In most cases, the debtor will. There are also times when the collector will not accept your first settlement offer. When that happens, just be patient. The longer it drags, the more likely they will settle with you.
When they do agree to settle, make sure you get everything in writing. Never send them payments until you have with you a signed and written copy of the agreement stating that after you pay off the settlement amount, the rest of the debt will be forgiven. Also, make sure that you are settling with an authorized representative. To check that, call the creditor and ask to settle with them. If they direct you to the collector you have been talking to, then they are authorized to settle your debts.
While the savings may be a good enough reason not to hire a professional, you need to know that negotiating with creditors can be frustrating and intimidating. This is most true when you are already dealing with third party collectors. Creditors are still somewhat concerned about their relationship with you as a consumer because after all, they still need you as a returning client. On the other hand, collectors are strictly in the business of going after defaulting debtors. They do not care about customer relationships.
If you think that you can handle the stress and you have the negotiation skills, here are the steps you need to follow when conducting your own debt settlement.
First of all, stop paying your creditors. You want them to think that you are in a financial crisis and one way to show that is by defaulting on your payments deliberately. That does not mean you will spend that amount on anything. You need to put that aside, preferably in a separate account, where you will grow it as your settlement fund. You will use this later on as a bargaining chip to get your creditor to agree on a settlement.
As the months go by without any payment from you, creditors will start calling. This is usually after the first 30 days since your last payment. At first, they will be polite as they ask you to pay your dues. But as it gets longer, they will become more aggressive and even harassing. When a few months have passed, the credit card company will pass your account to a collector. This is when things will get uglier. You will find yourself threatened and this is where some people start to break. Collectors will use all means possible to force you to pay. They will even threaten you with a lawsuit or jail time.
As the calls become nastier, you should keep your cool. Ignore the threats and read about your rights as a consumer. You can find out what they are through the Fair Debt Collection Practices Act (FDCPA). Even if the collector threatens you with a lawsuit, they are really hesitant to do that. If you are in a real crisis, the courts may decide to discharge your debts and they can end up with nothing.
During your conversation with creditors and collectors, keep mentioning bankruptcy. Tell them that you do not have money and what little you have is barely enough to cover your daily needs. When the 6th month mark comes, start offering to settle. Say that if they do not settle, you may have to file for bankruptcy. Do not be demanding and show hesitation to declare that you are bankrupt.
Continue negotiating until you reach a settlement. In some cases the collector will make the first offer to settle. In most cases, the debtor will. There are also times when the collector will not accept your first settlement offer. When that happens, just be patient. The longer it drags, the more likely they will settle with you.
When they do agree to settle, make sure you get everything in writing. Never send them payments until you have with you a signed and written copy of the agreement stating that after you pay off the settlement amount, the rest of the debt will be forgiven. Also, make sure that you are settling with an authorized representative. To check that, call the creditor and ask to settle with them. If they direct you to the collector you have been talking to, then they are authorized to settle your debts.
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