Do It Yourself Debt Settlement

It is possible to settle your debts on your own, but you need to prepare yourself for dealing with debt collectors!woman-worried-debt-pressure

Here's some tips for Do It Yourself Debt Settlement:

If you have tried unsuccessfully to keep up with all of the required, minimum payments on your unsecured debt, then you should definitely consider Debt Settlement.

Although I have been helping people deal with the financial pressure of having too much debt for over 10 years now, and have helped hundreds of people settle their debts, I do believe it is possible for someone to settle debts on their own, but you need to "buckle up for a bumpy ride!"

You need to be prepared to spend a lot of time (many times very frustrating, emotionally) dealing with professionally trained debt collectors. 

These debt collectors are usually paid a commission or percentage of how much they can get from you, so you know they are not going to give in, willingly!

My point is that you need to understand that the Debt Collection Industry and Debt Collectors specifically are in business to make a profit and they are not going to settle without using every method (legal and border-line legal) to get you to pay as much as possible.

Since you are considering trying to settle your debts for less than the full balance you owe, I'm guessing that you fit one or more of the following criteria:

  • You have been laid off or lost a job, and therefore your income has been dramatically reduced.
  • You may have had a loved one or spouse become extremely ill or possible die which affected your ability to work.
  • Divorce is usually a financial challenge.
  • A long term or permanent disability will not allow you to earn what you used to earn.
  • Retirement on a fixed income that is barely or not able to keep up with the bills.

But, if you are ready to give it a try, then here's some tips to help:

Understand the basic debt collection process.

Typically, when an unsecured account (not a "secured loan", which is backed by property or other collateral) becomes delinquent, it is usually charged off and turned over or sold to a debt collector.

This debt collector may be an attorney/law firm, that specializes in the collection of debt.

It takes time for a delinquent account to be considered for a settlement. 

Most debt collectors will not consider a settlement until the account has gone 120 - 180 days without any payments.  By the way, please be wary of a HARDSHIP PROGRAM the creditor offers!  Usually, they only barely pay the interest and ultimately you will have to start repaying the payments as before!  Basically, you are just delaying the inevitable of having to repay 100% of the debt you owe with interest.

The best settlements are usually negotiated when you have a lump sum or one-time payment saved up to offer.

After you have carefully prepared a BASIC HOUSEHOLD BUDGET, and know exactly what you can set aside each month to go towards negotiating a settlement, you must be very consistent and disciplined to actually put that money aside.

Set a goal of being able to offer at least 25% - 50% of the balance on at least one of your accounts. 

You'll also find out that the smaller the balance, the harder it is to get a decent settlement reduction!  The debt collector believes that if you ow $300 - $500 or so, then you should be able to come up with $200 -$400 and they may give you up to 6 months to do it!

However, if you owe $5,000, then they may be willing to take a settlement of 50% or less as you are a risk of seeking bankruptcy protection on larger amounts of debt.

Don't answer the phone unless you know who it is!

If they haven't started calling several times a day, they will!

I'll show you how to stop the calls in a minute, but in the meantime, DON'T ANSWER THE PHONE, unless you know who it is.

Debt collectors are trained to intimidate and get you to pay! PERIOD!  If they can engage you in a conversation, they will try to use what you reveal to help them collect more money!

Suppose you have realtives that may be able to help you. DO NOT SAY ANYTHING ABOUT THAT! 

They need to think that you are really in financial trouble and that if settlements cannot be negotiated, then you will be forced into bankruptcy.

I'm not advocating lying, but just don't say too much! It's OK to briefly...I said BRIEFLY, explaine your financial hardship, but don't go into too much detail.  You may think it helps, but it doesn't.

You can put a stop to the collection calls.

You will need to write a letter to each collector demanding that they stop calling you.


STOP Collection Calls Free Sample Letter

You'll usually get better settlements during the last week of the month and toward the last week of a quarter.

Debt collectors have their budgets and target collection numbers to meet and are usually a little more willing to deal as the end of the month or quarter is getting close.

Always ask the debt collector what is the best settlement they can offer you.  Remebmer, in negotiating, usually the one who mentions a dollar amount first, loses!

When you finally agree on a settlement, GET THE AGREEMENT IN WRITING!

Don't trust a phone conversation, period! If they will not email, fax or mail the agreement, then you don't have a legitimate, professional debt collector...move on!

Make a copy of the check you mail and keep the agreement.

I've seen several cases over the years when a debt that had been settled a long time ago, showed up again at another debt collector's company.  These are usually debt buyers and have purchased a list of debts for pennies on the dollar.

Many of these so-called "debts" have no paper trail to substantiate or prove that the debt is legitimate.

Providing the settlement agreement and copy of the canceled (they cashed your check) check is proof enough that this debt had been settled.

One final thing...

Depending on your situation, you may be able to have a debt canceled and/or removed from your credit report if the debt collector cannot VALIDATE the legitimacy of the debt!

If you feel like you paid the debt off years ago, but have no proof, try sending a VALIDATION LETTER.  The debt collector must stop collection activity and provide proof that you really owe the debt. This will help:


OK, so there you go!  If you are persistent and follow through, it is certainly possible for you to settle your debts on your own.

But, as you can see, Do It Yourself Debt Settlement can and will be very TIME CONSUMING and challenging. 

If you try to settle your debts on your own and are unsuccessful or tired of the process, let us help.




Tags: debt collection, debt settlement, how to stop collection calls, debt relief in Portland Oregon, do it yourself debt settlement, hardship programs

Are Hardship Programs Offered by Creditors a Good Idea?

hardship programsHere you are again.  You just deposited your pay check and it is time to pay the bills.  As always, you are just barely getting by.  You are juggling your bills, your due dates, and your grace periods each and every month.  You have so many balls in the air, you can't keep them straight.  Sooner or later, one of the balls will drop and your financial "plan" will come toppling down.

In desperation, you start calling your creditors to see if there is anything they can do to help, and they offer you a Hardship Program. 

What is a Credit Card Hardship Program?

If you have tried in the past to enroll in a Hardship Program with one or more of your creditors, you may have been disappointed to find our that they are not eager to help out when you are current with your payments.  However, if you have fallen behind on your monthly payments, your creditors will be more receptive to offering you a deal. 

The plan that your creditors will offer you will differ depending on the bank and  how far behind you are.  Here are some examples of what a hardship plan might look like:

  • Temporary Hardship Program - Your monthly payment is reduced to around 2.5 percent of your balance, usually for anywhere from 6 to 12 months. Your interest rate is reduced, and penalties and fees are often waived. When your temporary hardship program expires, your account will go back to the pre-plan arrangement.

  • Long Term Hardship Program - With this type of plan, your accounts are generally closed and the interest rates are reduced.  You will most likely be put on a payment plan to get the full balance paid off within 5 years.  If you default on any payments while in a Long Term Hardship Program, your interest rate, payment, and fees will go back to the pre-plan arrangement.

Are Credit Card Hardship Programs a Good Idea?

These Hardship Programs might be just what you need to get you over your financial hump.  However, never forget that the goal of the credit card industry is to make money!

When your creditors offer you a Hardship Plan, keep in mind the saying...

"If it sounds too good to be true, it probably is"

  • First, there is no guarantee that you will be able to enroll in your creditors Hardship Program.  Once your lender finds out that you are struggling, they may decide to reduce your credit limit or even close your account all together.
  • Next, enrolling in a Hardship Program will usually be noted on your credit report as "Hardship Payment Plan". This could cause problems and even increase your interest rates with your other credit card accounts.
  • Finally, these Hardship Programs are just short term solutions to what is most likely a long term problem.  If you default even once during your Hardship Program, you interest rates and payments will go up to the same or even more that before you got "help".

Enrolling in a Hardship Program with your creditors should always be a last resort. If you don’t want to go it alone, look for a Debt Relief Company, which can help you develop a debt payoff plan. Trained Debt Solutions Specialists can negotiate with lenders on your behalf to lower both your interest rate and monthly payments and even the total amount of debt that you owe.

hardship programs

Tags: credit card hardship plan, debt relief programs, hardship programs