Friday, January 11, 2013

Thinking About DIY Debt Negotiation? Read This First.

Debt negotiation or debt settlement is something that you can accomplish on your own. There are benefits to hiring a professional to help out but with pure determination, discipline and adequate knowledge of the whole process, you should be able to manage by yourself.

Performing your own negotiation is tough - there is no doubt about that. While it is doable, it also involves a certain amount of stress and frustration to accomplish. That being said, you need to consider carefully if you have the qualities to make it work.

If you are certain that you can handle this by your lonesome, here are the steps that you need to take.

First is to analyze your finances to see just how much you can offer your creditor as a settlement amount. Check your income, expenses and find out how much you can raise.

As you are doing that, you need to stop sending payments to your creditors. They will not acknowledge your efforts to negotiate debt if you continue making timely payments. The only way that they will agree to listen to your proposal is when you are in a serious financial crisis. Intentionally defaulting on your payments is one way to show this and get their attention.

Whatever amount you stop sending to your creditors should be placed in a separate account. This is where you will grow it and keep it hidden until they have agreed to settle with you. Take note that you need to continually send payments to this account.

As you default on your payment, the creditor will start calling you to remind you that you failed to pay on time. This gets pretty ugly easily especially when you claim that you have no money to send them. Despite the threats, disrespect and harassment, you need to keep a level head. Be polite even if they are not. It is nothing personal and remember, it is your responsibility to pay them off. However, if things get too uncomfortable and nasty, you should read about the Fair Debt Collection Practices Act or FDCPA that contains the do’s and don’ts in collection calls and methods.

When you receive an authorized letter from your creditor or a third party collection agency stating that they will take legal action against you, this is the time that you mention your settlement offer. Feign ignorance and innocently ask that you have heard about debt settlement and you were wondering if that is something that you can go into. Sometimes, the creditors will initiate this before filing for a lawsuit. Or, you can also offer it after the 4th or 6th month after you last payment.

Begin your offer with 25% of the outstanding balance. This is when you and the creditor/collector will haggle. Do not agree on an amount that you cannot afford. You may not have the same opportunity to settle if you fail to pay off the funds that you and the creditor will agree on.

It is important to keep mentioning that your only other option is bankruptcy (if they refuse to agree on a settlement). If you are in a real financial crisis, this is possibly where you will really end up.

In the event that your creditor agrees to settle with you, remember to put everything in black and white. Do not pay for anything until you have in a written agreement that the creditor will forgive the rest of your debt after you have paid for the settlement amount.

National Debt Relief can help answer your questions about debt settlement. The initial consultation is free so it is best to take advantage of that. Get to know what options you have to achieve debt freedom.

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