Yes! While many people prefer to hire a credit card debt settlement company to deal with the sticky aspects of consumer debt settlement, it is certainly possible to settle your own debts. In fact, thanks to the new bankruptcy laws limiting who can file, this is the only option for many people. You will need to have the ability to stay calm through negotiations and the willingness to not give up. Many people have been very successful in debt settlement negotiations and you can be too! Let’s look at what you need to know about settling your own debts!
What Debts Can You Settle?
Typically, the only debts that you will be able to settle are unsecured debts. Examples of these are credit cards, store cards, medical bills, bounced checks and personal loans. Student loans are also unsecured but can be much more difficult to settle. Unsecured credit card debt is by far the easiest to settle.
Keys to Negotiating
- Be Prepared! Before you pick up the phone, you should already have an idea of what you can afford to pay. It doesn’t do you any good to arrange for a settlement in an amount that you cannot afford. You should have in hand your most recent account statement as well as any other communication you have received from the creditor. Specifically, if they have previously sent you a letter offering a settlement, this will be very helpful to have.
- In negotiating, the person who mentions price first typically looses. For this reason, it is smart to let the creditor bring up price first. This gives you a starting point to negotiate down from and gives you a good idea of where they are at. Just remember – you don’t want to accept their first offer. A card credit debt negotiation settlement can take time!
- When you call, make it clear from the beginning that you would like to settle the debt. Collectors are not typically friendly, so don’t be surprised if you are treated rudely. You MUST have thick skin. Keep in mind that chances are the person on the other end of the phone is a very lowly paid individual who may not have perfect credit themselves! If they flatly refuse the idea of a settlement, ask to speak to their supervisor.
- Make sure that you are professional. Calls are typically recording and getting aggressive is not going to serve you well. Avoid using any profane language or making insults. It will not help with settlement credit card debt.
- If speaking to a supervisor doesn’t work, don’t give up. Send a credit card debt settlement letter to the head of collections and the president of the company. Unlike when you were trying to talk with someone, this time you need to be very specific up front about what you are prepared to pay. The indivudals who are actually answering for the companies bottom line may be much more willing to listen to what you have to say!
What Should You Expect to Settle For?
Ideally, you want to negotiate credit card debt so that your balance is reduced by 35% to 60% of what you owe. At a minimum, you want all of the late fees, over limit fees and finance charges removed from your account. Ususally, this will add up to between 35% and 40% of your balance. If the creditor is not willing to do this, you probably don’t want to settle at all. It just isn’t worth the damage to your credit if you are only going to save 20%! The creditor may come back to you at a later take and offer you a better settlement.
Keys to a Successful Settlement
When you start working on your card credit debt settlement, you shouldn’t expect to reach a settlement over night. While it would be nice if things happened that way, the reality is that most financial institutions don’t move quickly! Don’t get discouraged as you are going through the process!
You will want to keep good records every time you speak to someone. Get the persons name, (If they won’t give you their last name ask for an employee number) and record the date and time you spoke with them. Prior to making any payment, get a letter from them stating that they agree to settle for the specific amount. NEVER rely on a verbal agreement – verbal agreements are not valid in most states and it is very likely that the creditor will not live up to their end of the bargain if you don’t have everything in writing.
Remember – debt settlement will hurt your credit but it is a far better alternative than filing for bankruptcy.
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