How to settle debts by yourself
Take stock of all income sources
The first thing you need to do when you embark on debt settlement on your own is to analyze your income sources of the present and future. If you are married, then you can make a combined inventory of the income and expense.
Evaluate how you can minimize expenses and save money. Based on the money saved, you can decide how much money you can allot to your creditor or creditors.
Evaluate your credit situation
You need to thoroughly evaluate your credit situation. This includes calculation of interests and outstanding amounts. You also need to find out whether loan agreement papers have been sold to collectors. If they are, then you have a stronger hold on negotiations because your creditor has already received a part of his money from the collector.
If you have to deal with collectors, then make sure that all the necessary documents are in order, send in checks instead of cash and offer lump sum payment at reduced costs. If you face problems from collection agencies, you can proceed through debt settlement agencies.
Negotiate openly with creditors
Your best bet is to be open with your creditors. Tell them your current situation and ask for a reduction. If you have no other option but to file bankruptcy, tell them so. You can write letters to all your creditors explaining the financial situation of the household and the amount that you can repay.
You can promise them lump sum payment in exchange of reduced loan. Negotiating directly with a creditor is better than hiring an agency because the risk of being slapped with lawsuits is lower.
Store all correspondence with creditors
It is very important that you keep proof of all your correspondence with creditors and collection agencies. In case creditors do file a lawsuit on you, correspondence will be helpful. Keep copies of checks sent and acceptance letters. When the loan has been paid in full, you need to request for an “all dues cleared” letter.
Be prompt in payment
As per your settlement, make sure that you make prompt payments to both the creditors and collection agencies. Creditors cannot be expected to be more lenient after reducing loan amount. Further, you need to order your credit report and check whether it has been updated.
Settling your debt yourself can save you the money that you pay as fees to settlement agencies and instill trust in creditors regarding your intentions.
The first thing you need to do when you embark on debt settlement on your own is to analyze your income sources of the present and future. If you are married, then you can make a combined inventory of the income and expense.
Evaluate how you can minimize expenses and save money. Based on the money saved, you can decide how much money you can allot to your creditor or creditors.
Evaluate your credit situation
You need to thoroughly evaluate your credit situation. This includes calculation of interests and outstanding amounts. You also need to find out whether loan agreement papers have been sold to collectors. If they are, then you have a stronger hold on negotiations because your creditor has already received a part of his money from the collector.
If you have to deal with collectors, then make sure that all the necessary documents are in order, send in checks instead of cash and offer lump sum payment at reduced costs. If you face problems from collection agencies, you can proceed through debt settlement agencies.
Negotiate openly with creditors
Your best bet is to be open with your creditors. Tell them your current situation and ask for a reduction. If you have no other option but to file bankruptcy, tell them so. You can write letters to all your creditors explaining the financial situation of the household and the amount that you can repay.
You can promise them lump sum payment in exchange of reduced loan. Negotiating directly with a creditor is better than hiring an agency because the risk of being slapped with lawsuits is lower.
Store all correspondence with creditors
It is very important that you keep proof of all your correspondence with creditors and collection agencies. In case creditors do file a lawsuit on you, correspondence will be helpful. Keep copies of checks sent and acceptance letters. When the loan has been paid in full, you need to request for an “all dues cleared” letter.
Be prompt in payment
As per your settlement, make sure that you make prompt payments to both the creditors and collection agencies. Creditors cannot be expected to be more lenient after reducing loan amount. Further, you need to order your credit report and check whether it has been updated.
Settling your debt yourself can save you the money that you pay as fees to settlement agencies and instill trust in creditors regarding your intentions.
[posted by : OFP on Sep. 29, 2011]
TAGS: debt, how to, debt settlement