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Can You Negotiate a Debt Settlement on Your Own?

Hand is holding Debt Settlement stack of papers.

Families that are buried in debt are ideal candidates for debt relief because it enhances their general wellbeing. Your physical and mental health may suffer if you have a large debt load. Every night, you might find yourself unable to sleep as you worry about how you will ever pay off all of your debt. It might even cause your family to fall apart or harm your productivity at work.

The “Doomsday” Approach

In the worst case, you might declare bankruptcy. The bankruptcy will remain on your credit report and could have a 10-year impact on your credit score, making this option somewhat of a “nuclear option.” During that time, it might be challenging for you to obtain new credit, making it challenging for you to rent an apartment or buy a house.

Settlement of Debt

Debt settlement is a method that can be used as an alternative to bankruptcy. This is how it goes. To start, you must have the financial means to contribute to a settlement fund. Many people fund this account with the cash they would typically pay to their creditors. You ought to have enough spare cash to start negotiating settlements in six months. It will take a strong constitution to get you through those months because lenders and collection agencies will undoubtedly harass you.

Around month five or month six, you then get in touch with your creditors and make a settlement offer. Your objective is to convince your creditors to lower your debts to a small portion of what you owe. You do this by informing them that if they agree to settle your debt for that amount, you have a certain amount of cash on hand and will pay right away. Naturally, this implies that you must have the money on hand to settle the claim.

Why Will Creditors Agree?

Since it’s preferable to filing for bankruptcy, where they might only receive pennies on the dollar, most creditors will agree to settle your debts for less than the full amount. For the majority of creditors, it’s actually preferable to selling your debt to a collection agency

Starting the Process

Making sure you have everything in writing is one of the most crucial aspects of debt settlement. Requesting copies of all three of your credit reports from Experian®, TransUnion®, and Equifax® will help you get the process started. On the website AnnualCreditReport.com, you can request all three of them with a single request. Create a list of all the businesses with which you have unsecured debts, such as credit card debt, next. Make your settlement oer over the phone to each one, including any collection agencies.

Possible rejection of your initial offer. In fact, the settlement process can drag on for several months. During this time, some of your creditors and collection agencies might still bug you or even threaten to sue you.

Make Sure you Have it all in Writing

With each creditor, you’ll likely receive a different settlement. In other words, some creditors might consent to a very low settlement offer, whereas others might refuse to budge at all. Get all the pertinent details in writing if a creditor does agree to settle your debt.

This should contain the amount you have agreed to pay, the method of payment (cashier’s check, electronic bank transfer, etc.), and the deadline for the payment. Obtaining documentation from each creditor stating that your debt has been paid in full is also crucial.

Debt Settlement through a Professional

Allied Enrollment Centers can assist if debt settlement sounds appealing but you’re unsure of your ability or desire to handle it on your own. Our debt counselors have years of experience in debt settlement negotiations that could help you save a significant amount of money