When you are so deep in debt seeing your way clear of it seems to be an impossibility, settling an account for less money than you borrowed can be an attractive option.
The possibility does exist — under certain circumstances.
In such case, you can choose to hire a professional debt settlement company to help you negotiate revised terms with your lenders. But can you also make a debt settlement offer on your own?
In truth yes, you can opt to negotiate with your creditors directly.
With that said, the learning curve is quite steep, which is why most people hire experienced help. But if you do decide to go it alone, you’ll need to answer the following questions first, to see if you have a shot at being successful.
Are You Eligible?
The first step to a successful DIY debt Settlement is evaluating yourself to determine if you are a good candidate.
Are You Delinquent On Your Payments?
In most cases, your creditor will not open up to a DIY debt settlement unless your payments have been delinquent for at least 90 days. However, you can make a debt-settlement offer on your own if your debt is over five months late. It is around this time that most creditors sell delinquent debts to third-party debt collection agencies.
Are You Financially Capable of Meeting the Terms of an Agreement?
Some lenders will demand you make a one-time payment in full of the agreed-upon amount — while others might be amenable to a shortened partial payment plan. Whichever the case, you should have enough ready cash available to satisfy ultimate payment agreement right away.
Do You Have the Much Required Negotiation Skills?
Can you make a debt settlement offer on your own? Well, confidence is key to effective negotiations for a DIY debt settlement. If you are not confident enough, you might as well opt for a debt settlement company.
Can You Understand the Terms?
During your DIY debt settlement discussions, you should talk about how much money you should (can) pay and how it will appear on your credit cards. Suffice to say; you might be able to settle at least 40-50 percent of what you originally owed. However, you are required to pay taxes if your forgiven amount is up to $600 or more.
Keep in mind your credit history might be damaged from the missed payments. Even after you meet the terms of the agreement, the settled debts will likely appear as “settled,” which is not a great look on your credit reports. However, you can talk to your creditor to report your settled debt as “paid as agreed” to minimize the negative impact.
Be Prepared for a Long Uphill Slog
While a DIY debt settlement might seem easy and straightforward, it is not. While creditors will often agree to settle, you’ll have to get to the right person at the right time with the right information and none of this will be apparent when you call.
Negotiating with your creditor requires confidence, perseverance, and persuasion. It might take you several calls to find the right person and even then, you’ll have to work through the details to reach an agreeable settlement. If your negotiations are not successful with one agent, you can call again for a more pleasant and friendly agent. If the front line service providers are not helpful, ask to talk to the manager or someone else in a higher position.
Before making the call:
- Be sure you can make a debt-settlement offer you can deliver.
- Gather all the documentation you’ll need to support your case and be ready to forward it when requested to do so.
- Be ready to explain the various financial conditions that have led to the delayed repayment and provide evidence to support your assertions.
Aim at making your creditor more understanding and considerate of your situation. When negotiating on the payable amount, you can start on lower ground as you progress towards the middle edge. Be careful not to agree on a payment amount you cannot handle.
Finalize the Deal
When you finally agree with your creditor, you should request a written agreement and credit reporting. However, remember that you will have to start again if you fail to honor the agreement and miss a payment. Again though, this will usually take the lay -person a lot of time, a lot of calls and a lot of trying to get to the right person. So yes, you can make a debt settlement offer on your own, but you might find it’s easier on your nerves and your time to enlist the assistance of a professional.