Being neck deep in debt can be a distressing situation. However, even if you are barely making ends meet, there are still ways for you to be able to meet your credit obligations through debt settlement. This type of debt relief involves a certain amount of haggling with your creditors. The idea is to come to an agreement on an amount that is lower than your outstanding balance. Of course, this is only meant for those who are in a real financial crisis and is trying to avoid bankruptcy.
You have the option to hire a debt settlement company to assist you in this. However, this task can be done on your own. Here are the vital points that you need to remember to perform your own debt settlement.
First of all, you need to stop paying all your creditors. Ideally, you should work on all your credit card debts because if the creditor sees that you are keeping up with the payments on another card, they will not settle with you. Also, late payments will get the creditors to sit up and notice you. The longer you miss out on your monthly dues, the more creditors will be amenable to settle.
As you intentionally miss your payments, you should be building up your settlement fund at the same time. Instead of giving it to the creditor, you put the intended money to a separate account where you will grow it while you wait for them to agree to a settlement with you.
When the creditors or collectors start calling, you need to entertain them but be consistent in your stand that you have no funds to continue with the original monthly payments. At a certain point, the calls will start getting ugly but these are just tactics to scare you into paying the original amount. Remember that if you are in a real financial crisis, the creditor may end up not getting a single dollar when they sue you in court or if you file for bankruptcy. Because of that, it is advised that you keep using the word bankruptcy to get them to settle with you.
In the sixth month, it should be safe to mention that you have heard about debt settlement and ask if that is an arrangement that you can have with the creditor. Make sure you are talking to someone who is authorized to negotiate on behalf of the original creditor. Give your offer and be persistent if they turn you down. Never agree on a amount that you cannot afford. Start by offering to pay for 25% of the original balance.
If you and the creditor/collector reach an agreeable settlement amount, do not send any payment unless you have a written agreement with an authorized signature. Do not forget to include in that document the clause that the original creditor can no longer come after you for this particular debt once the amount had been paid off.