How to Achieve Settlement Debt Relief - Do-It-Yourself |
By Frank Jones on February 2, 2011
.jpg.aspx?width=75&height=75) Debt Settlement companies are quick to direct potential customers to a study done by Dr. Richard A. Briesch, PhD which presents “only a vague assertion that debt settlement provided greater consumer welfare than debt management plans”, as one review points out. While debt management plans may, or may not, be better for consumers, it is pointless to spend your hard-earned money on professional debt settlement when you could do-it-yourself and save.
Process
The process is simple at is most basic level:
- Contact your creditor
- Ask them to accept less money than what you owe
- Repeat
However, using some creativity we can increase the savings and the complexity for the entire process. Let's break this down into the component steps to consider each in more detail.
Contact Your Creditor
Before contacting any creditors you will need to gather the most recent bill from each of your unsecured loans. You can only settle unsecured loans because they do not have collateral attached which could be repossessed (e.g. home, vehicle, boat, or other assets). Once you have each of your most recent bills, you need to organize them according to the interest rate. At the top of the list will be you bill with the highest interest rate, the bottom will be your lowest interest rate. The reason for this is that you will save more money by paying off your high interest loans before the lower interest loans. Next, you should check to see if you can transfer any balance from higher interest loans to those with lower interest. After you've done this, you're ready to begin contacting your creditors to ask for a settlement.
Ask for a Settlement
When asking for a settlement it is best to have a number in mind and the cash to back it up. If you don't have any cash ready, start saving now and begin with the bill that has the highest interest and lowest balance. An unsecured loan is typically settled for between 50-80% of the balance. As with any negotiation of this type, you want to start with a low offer and negotiate your way to some middle ground. It is important to have your payment ready once you reach a settlement because there are often time restrictions. Typically, you can expect any settlement reached to expire within two – four weeks after the agreement is reached. Also, you will need to get the agreement in writing before sending your payment.
Repeat
Once you have settled one of your debts it is important to return to step one and recompile your list of most recent bills. Debt settlement is a process which can take some time and interest rates will change over time. This could change the order in which you need to discuss your debt settlements. |
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