Debt settlement without using a third party

Have you called your creditors and placed a proposal? Get more help from the DIY section in this website. See whether you are happy with the arrangements done with your creditors. Take a free counseling and compare the negotiations before you finalize with your decisions.

debt consolidation will be a better choice than debt settlement. But if you are unable to afford the payment plan set in consolidation, debt settlement is the right choice for you.

When settling the debts, your accounts will have to be in defaults for few months before you can explain well to your creditors that you are unable to pay off with the existing interest rates and fees. Hence, a settlement will be good in your case.

Whatever may be the situation, take professional advice from a debt counselor. You will see a variety of options and finalize your choice.

I have done it myself numerous times. I have contacted them via mail so that I can keep a copy of the correspondence. If they contact me with a proposal for settlement, I ask them to forward me a copy of the agreement and I keep safe in a file just in case something strange happens. Most companies will take a settlement if you are willing to work with them. It is much cheaper to do it yourself than do it through a third party because the third party charges you for these services.

The DIY section here is very good in giving you advice on how to do it yourself. You might want to consider looking there first.

I hope that this helps and good luck to you.

I done a settlement with a company on my own. It was pretty easy, but you just need to make sure that you get documentation regarding everything. Also, once you do finish the settlement, be sure to get a "Paid by Settlement" letter. (I can't remember what the exact name of the letter is, but that will work) :lol:

Alexandra and natdust,
Was it hard to do? You just stopped paying and saved the money yourself, then offered the settlement? I am not sure I could do that. We have 8 accounts that need settled. I might try that with one or two but I am not sure about handling that many.

I have done my own and some for friends. I do not find it hard at all. To settle debts you need to be decent at negotiations and communication. Always remember that it is only business and nothing personal. As hard as it may be leave your emotions at the door. You are just another number on a computer screen to a collector. Also if a company is going to sue and go for judgment then there is nothing you can do about it anymore than a debt settlement company can do about it.

I have done most of my negotiations on the phone but if you are dealing with a hardass that is high pressure or if you get nervous then you are better off to use mail only. Make out an offer in writing that you can keep to and send it to them. Do not spend more than 5 minutes on the phone trying to negotiate. Make the offer and let them respond either yes or no and hang up as soon as the collector starts being an idiot which is usually very quickly. It will take a number of calls before most collectors start working with you especially if you initiate the call. If they try to out talk you or over talk you hang up. If they shout hang up. Do not pay them a dime without the offer in writing. Do not pay with post dated checks. Do not pay over the phone. Never give them your bank account number. I prefer to pay with a certified bank check. Keep copies of all payments made and a copy of the cashed check if you can get one with the signed agreement for 100 years or until you die. I have had a few collectors try to recollect debt I have settled and these copies saved me a bunch of money.

The older the debt the better position you are in. Most companies will not negotiate on a debt that is deliquent 2 months but if it has been sitting for 2 years you have a pretty good shot at a 50% settlement or less. If its any kind of loan I try to settle at 50% of the borrowed amount and get all fees, penalties and interest waived.

If the debt is low enough (generally under $5,000 after fees,penalties and interest) that they will not sue then you are in a decent position too. Basically, if they are not going to sue then all they can do is screw with your credit. If you are not in a big hurry to fix your credit then time is on your side.

Discipline and budgeting is the two qualities you need to save up the settlement offers. That is really the best part about a settlement company. They force you to save because you make a monthly payment to them and then they try to settle with that saved money. The bad part about them is many of them charge a lot of money for something that does not take much work at all. I've read post on here by people that have been charged over $10,000 in fees to settle some debt which seems way to expensive to me. The thing about debt settlement is it takes no more effort to settle a $20,000 debt at 50% then it does a $1,000 debt. It is really the number of debts you are settling not the actual dollar amount of all of them added together that adds difficulty.

Dollarsandsince,
I am one of those "hate to talk on the phone people". I want to do it by mail, what % would you start at asking as a settlement. I was thinking 40% on an older debt (2 years) hoping to settle for 50%, and 50% on newer debt hoping for 60%. Are those realistic expectations?

It sounds good to me but you never know how a CA will respond. Make the offer at 40-50% of the amount you actually received and spent not the amount they are reporting which is highly inflated with fees, penalties and interest.

how can you find out what that total is without fees on a 2 year old, or recent debt? Do they have to disclose? Is there another way to find out other than asking them?

To figure out the actual borrowed amount if you do not know it you will need to send a debt validation letter forcing them to send you your original statements. You can review the statements and start subtracting off any fee amount you see from the final balance. Another good way to figure it out is base it off your credit line if you maxed the card. For example, if you were issued a credit card with a 2,000 limit and you took a cash advance for 1,950 then defaulted then it is a pretty safe bit that the amount you owe after subtracting fees, penalties and interest is 1,950. If the amount the are reporting is 4,000 on that card then you know they doubled the amount you owe by charging a bunch of bogus fees. They will not volunteer any of this information and you will have to argue with them to get it probably unless you send a DV letter. I would not pay any CA without one after researching this site although I have settled debts in the past without validation.

I am not behind on anything. I guess I am in no position at this time to even try and settle? This is the first month I haven't been able to pay anything.

Lisa...why not take a look in the DIY section at the top...may give you some more info...

I have been doing a ton of reading and feel a lot more empowered. I certainly don't want to spend $15K for something I can do myself.

so when we settle, we will actually be settling with a collection agency, right? Then do they report back that the account is settled? Or will it always be reflected as charged off?

Thanks for your patience. I am still learning!

I would say it depends. Doing it yourself may take a lot of time. For me personally time is more than money. I work full time, study full time and work from home as well. So if I have to spend hours and hours of talking on the phone, typing and mailing, I rather pay to have it done the first time, the right way.