Do-It-Yourself Debt Settlement

 
Introduction to debt settlement

Like many Americans, you may be living under a crushing debt load. Maybe your bills are coming in even before you have paid those from the previous month. Or maybe you're getting endless phone calls and letters from collection agencies. You may even be considering bankruptcy!

If any of this sounds familiar, a debt settlement plan may be your answer. An effective debt settlement plan will allow you to eliminate your debts for pennies on the dollar.

You could hire a debt settlement company to do it for you, but if you have the determination and the desire, you can create and put into action a debt settlement plan yourself!

Here are a few tips for creating an effective debt settlement plan:

1. Determine how much you can afford to pay in total for debt settlement. Write down all of your essential expenses, such as rent, mortgage, meals, gas, etc. Subtract this amount from your monthly net pay. Whatever is left over is what you can pay out each month for your debt settlement plan.
    
2. Make a list of all of your delinquent accounts and the amounts owed on each.
    
3. Beside each creditor's name and balance owed, write down how much of your debt settlement budget you can pay toward that account to settle it. The closer to 50% of the balance that you can get, the better chance you'll have of getting your offer accepted.
    
4. Contact your creditors (or the collection agencies that are representing them), explaining your plan and how it affects them. Explain that your current financial situation simply won't allow you to make your payments as you agreed earlier.
   
   Tell your creditors how much you owe in total, how much you have available to pay off all of your debts, and how much you can pay to settle their particular accounts. Let them know that your offer is being sent to all of your creditors, and the ones who accept the offer first will be paid off first.
    
5. You'll receive some acceptance letters as well as rejections. Keep a copy of the acceptance letters for your records and immediately send in the amounts agreed upon, requesting a receipt stating "paid in full".
   
   The next month, repeat the process while adjusting your debt settlement offers upwards. You can now afford to offer each creditor a higher percentage of the outstanding balance because you have fewer debts left to pay off. Again, you'll receive some acceptance letters and perhaps a rejection or two.
    
6. Keep repeating this process each month until all of your debts have been settled.

• Insist on getting all debt settlement agreements in writing, and never pay the amount agreed upon until you receive the signed written agreement. Your creditors could easily accept your offer on the phone, then "forget" about the settlement offer after receiving your payment.
   
• Keep all of the signed agreements and receipts for your records, even after the accounts have been marked "settled" on your credit reports.
   
• Be very careful with your finances in the future to ensure that you never have to go through the debt settlement process again.
   
• If you simply feel uncomfortable dealing with your creditors yourself (or incapable of doing so), you can select a reputable debt settlement company to do it for you (for a hefty fee). If you choose carefully, a good debt settlement company can do the entire process quickly on your behalf.

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