You have too much debt. You’re wondering how to change your current financial situation. You’re considering calling a debt settlement company for help. Before you pick up that phone, consider an alternative.
Do it yourself debt settlement allows you to negotiate with your lenders on your own behalf. You may be able to:
- Reduce your overall debt
- Save yourself from accruing further penalties and interest fees
- Be debt free sooner than if you made the minimum payment each month
- Avoid filing for bankruptcy
Do it yourself debt settlement isn’t for everyone. However, if you understand financial issues and feel comfortable negotiating with your creditors, it can be a way to get out of debt and save money.
Consumers Have Debt Collection Rights
Before you even start, understand that you have debt collection rights afforded you under the Federal Trade Commission (FTC). These include:
- Debt collectors may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you allow it.
- Debt collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls.
- Debt collectors must send you a written notice within five days of first contact to tell you how much money, the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.
- Debt collectors may not harass, oppress, or abuse you or any third parties they contact.
Make sure you know your rights before you proceed. If a creditor violates your rights, you have the right to file a complaint with the FTC. Be sure to know the company name, representative name, company address and phone number, as well as dates, times, and topics of discussion.
Prepare to Make that Call
Before you make any calls to your creditors, have the most recent bill in front of you and follow these ten steps:
- Negotiate a reasonable settlement. Lenders want their money. Naturally, they may refuse to settle, which is their right. However, once the negotiations begin, don’t be afraid to ask for more. Ask them to remove fees and penalties. If they offer three months at no interest, request six. Whatever you do, be honest, upfront, and courteous in all your dealings.
- Make an upfront payment. As a good faith gesture, you may be required to pay at least half of the negotiated amount up front. So know how much you can reasonably afford.
- Keep good records. Track the date, time, and each contact’s name along with the general overview of the conversation.
- Ask to speak to someone in authority. Frequently when you call a lender, you wind up with someone in customer service or collections. They may have limited authority to negotiate. Supervisors are in a better position to negotiate a reasonable payment plan.
- Put it in writing. If you find that even by speaking with a supervisor you cannot reach an agreement, consider putting your specific request in writing to someone in higher authority.
- Get it in writing. Once you and your creditor have agreed to a settlement amount, request a letter of confirmation.
- Clean up your credit report. To maintain your good credit, request that you creditor mark your credit record “paid in full.” They are not required to do so, but it doesn’t hurt to ask.
- Make your payment on time. Once you have negotiated and agreed to a payment plan or lump-sum settlement, hold up your end of the bargain. However, do not feel compelled to offer your personal bank information for an automatic debit. Instead, send a money order.
- Know when you need a lawyer. Because negotiations may not go your way, always have a backup plan. That may mean having access to a lawyer.
- Know when to contact a debt settlement company. In the end, you may realize that going it alone is more difficult than you expected. Find a good debt settlement company to help.
If your goal is to get your debt under control, do it yourself debt settlement may be the answer.