If you cannot pay the minimum balance on your debts, it's time for you to settle your debts. Debt settlement is where you negotiate with creditors/collection agencies and try to reduce your debt.
Here is a step-by-step guide to settling your debts by yourself:
How to settle your debts yourself if the debt is held by the creditor
- At the Creditors Database and find your creditor's contact information, then look these mailing instructions to make sure your letter is mailed correctly.
- Keep all acceptance letters, send in the amounts agreed upon, and request a receipt stating that the debt has been "Paid in full".
- Before agreeing on a monthly installment amount, find how much you should offer to your creditor.
- Contact your creditors, explain your situation, and then make a reasonable offer to them.
- Inform them that you are sending this offer to all your creditors and the ones who accept the offer first will be paid first.
- Repeat this process each month and adjust your debt settlement offers upwards until you are debt-free.
- Make sure that once you have paid the debt in full, you get the "Paid in full" letter you requested.
- Don't forget to obtain a fresh credit report once a year and keep yourself updated on your account status!
How to settle your debts yourself if the debt is held by a collection agency
- Proof that the CA has been assigned to collect the debt by a creditor.
- Detailed payment history starting with the original creditor.
- Copy of the original signed debt agreement or credit card application.
- If the reply is not satisfactory, inform the CA that they are violating the Fair Debt Collections Practices Act and they need to remove the collection listing from your credit report or you will sue them.