Debt settlement is, probably, one of the most efficient ways to pay off your debts easily. It is a process by which you can negotiate with your creditors and reduce your outstanding debt amount by almost 40-60%.
There are various debt settlement companies that help the borrowers to settle their debts. But generally, you’ll end up paying high commission fees to these companies. So, it is more advisable that you settle your debts on your own. Do it yourself debt settlement process will allow you to stay in control of all the negotiations with your creditors, thus giving you advantage over hiring a settlement company to negotiate your debt.
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Few efficient steps to help you settle your debt yourself
The following are a few efficient steps that will help you to settle your debts on your own easily –
1. Stop paying: If you want to go for a debt settlement, stop making payments to your creditors for atleast 180 days. Creditors don’t agree to negotiate if you’re paying your debts or missed just one or two payments.
2. Emergency savings fund: You should have an emergency savings fund if you want to settle your debts. Most of your creditors will ask for a lump-sum payment upfront after a negotiation and this is when your fund will come into use.
3. Contact your creditors: Contact your creditors by sending them a letter explaining your debt settlement plan with a note that they’ll benefit from it. Show them that you’re serious about paying your debt. Most creditors don’t want their customers to default, so they might agree to your plan.
4. Negotiate with your creditors: Many creditors may not agree to your settlement plan and may come up with new offers. Try to negotiate with them in a professional way till you reach the amount figure of your choice.
5. Ask for written settlement letter: If your creditor has agreed to your settlement offer or has offered you a good plan, ask them for the settlement letter in writing. Don’t accept if the settlement letter don’t have the following information –
a) The exact amount agreed upon.
b) The exact date by which the creditor must receive the settlement amount.
c) The creditors’ agreement that the settlement amount will fully resolve the debt and that, they’ll not pursue further collection.
d) The creditor will report your account balance as $0 to the credit bureaus.
e) The creditor will update the account status on your credit report as ‘Paid in full’ or ‘Paid as agreed’.
6. Pay promptly: Once you’ve the settlement agreement in hand, start paying to your creditors promptly. To avoid being late in your payments, try to send your payments 15 days prior to the due dates.
If you follow these steps for debt settlement sincerely, you’ll be able to pay off your debts without the help of any debt settlement companies. Debt settlement, in recent times, has been one of the most popular methods to pay off debts. But, it’s necessary that you do the homework and is fully prepared before going for the debt settlement process.
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