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Debt Settlement – Do It Yourself!

According to the Debt Settlement Arrangement, your creditors agree to accept a one-time payment that is less than the balance of your account in order to adequately resolve your debt. If you have a cash package, debt settlement is a reasonable option to handle high-interest unsecured debt.

However, do not hire anyone or any company to solve the debt problem. You can effectively solve the debt. Debt settlement companies are expensive and generally not refundable. If a clearing company can convince one of your creditors to settle the debt below the full balance, then you can do the same.

Debt Settlement What the company is doing
Debt Settlement The company claims it will pay a fee to convince your creditors to take half of your debt to solve your debt. It sounds pretty good! Since you may not have a large amount of cash, you need to pay the debt clearing company a series of monthly payments. First, know that your payment will usually reach 100% at the billing company's expense until you pay the bill. Only after paying the fee did you begin to set up a settlement fund. When you have established enough accounts in your debt settlement account, the company will try to settle your debts.

This is Catch
Your creditors did not agree. In multiple months, you are paying the debt settlement company, and you are told that the creditor will be resolved to start or continue active collection activities. You will receive calls and letters. The situation will be worse. You may be sued and face the debt repayment situation where the company holds your money. Tell creditors that you have signed a plan with Settlements-'R-Us, Inc., and monthly payments will not have any effect on your creditors. They do not care. In order to avoid supporting roles, you may be forced to go bankrupt. You can get money from your account from a debt clearing company, but the cost you pay for may disappear forever, even if the company does not pay you a debt.

What is the moral of this story? Never consider signing a debt settlement company unless you obtain a letter of creditor’s letterhead from each creditor, stating that the creditor will accept a specific dollar amount at a specific date in the future to completely resolve your debt, and During this period, creditors will not recover debt.

If you do have an idle cash, you should consider doing your own settlement and other options to pay off unsecured debt. Please keep in mind the following points:

  • You need an emergency savings fund. Don't use every pocket money. You can get together to solve the debt and make yourself vulnerable.
  • It is a bad idea to withdraw funds from retirement accounts in advance to pay off debt
  • If you solve the debt problem, creditors may report the amount of “forgiveness” to the IRS. The IRS considers debt relief to be part of your income and you may be subject to income tax on April 15 next year. Your debt settlement strategy must include a plan to make cash payments exempt from debt taxes. You do not want to get new IRS debt from debt settlement.
  • Because the effect of debt repayment on your credit score is worse than any method, full debt repayment, such as debt management plan. After the debt settlement is completed, your credit report should show that the settled debt balance is $0, but it may also show the symbol – the exact wording is negotiable – the effect of "less than the full paid balance".

Keep these notes in mind, the following is how to solve the debt problem

  1. Understand your source of power in the negotiation of settlement: You may not have paid the debt at all. Before any creditor agrees to settle the debt, it must be convinced that 40% or 50% of the total balance received today will be better rather than receiving 100% of the debt in the coming months or years. This means that few creditors will negotiate debt settlement before the debt liquidation ends, and from the creditor’s point of view, it is clear from the creditor’s perspective that it is problematic to prove successful liquidation.
  2. If you reach a settlement agreement, creditors will want to pay in one lump sum. Until you have mastered the cash you have decided to use to repay your debt, you can begin negotiations on reconciliation.
  3. wrote to the creditor to propose specific solutions. You can find many examples of debt clearing letters on the Internet by searching for "Debt Settlement Example Letters." Copy your record book and all communications with creditors. Send all letters of creditors through a certification email and request a receipt. Email is not acceptable.
  4. What dollar amount should you propose as a solution? This question is not an understatement because it depends on the situation. The more serious the debt default, the easier it is for creditors to resolve. The less likely the creditor judges to recover the debt, the easier it is for the creditor to resolve. If you miss two payments for credit card debt, then credit card companies may not even be able to participate in the settlement negotiations. But if you no longer pay your credit card debt two years ago and the credit card company has deducted the debt and sold it to the collection agency, and you have already paid any fees to the collection agency and ignored their letters and calls, and you The credit score is dumped, and you may find that the collection agency is willing to agree on a solution that is very beneficial to you. Most settlements eventually account for 40%-60% of the original balance. As with any negotiation, you want to make room to improve your offer, so in most cases it may be wise to provide less than 40% of your balance.
  5. Assume that you have decided to own $3,000 of idle cash and you can work on solving $6,000 of debt. Start negotiations for less than $3,000, perhaps $1,500 or $2,000. If the creditor makes a $4,000 offer, you can choose to increase the bid to $2,500 or $3,000, but do not provide or agree to settle the $3,000 you have decided to set aside. If the creditor is not willing to withdraw, he can politely end the negotiations by inviting the creditor to reconsider and contact you again in written form.
  6. If the creditor replies to your offer letter over the phone, please record in detail any suggestions made in the mobile phone and include in your note the date, time and name of the caller and employee ID number. On the phone agreed to nothing. Even if your verbal counter quote is acceptable, tell the caller you need to provide a written quote before you agree. If the creditor refuses to make an offer in writing, tell the caller that you will not agree to any settlement that has not been recorded in writing and end the notice politely by inviting the creditor to restart the negotiation and attach a letter stating that all terms are settled Offers
  7. Unless in writing and 1) In the name of the agreed dollar amount; 2) The date on which the designated creditor must receive the settlement amount; 3) It is stated that the creditor agrees that the dollar amount will fully resolve the debt and will not Pursue further charges; 4) Claim creditors agree to report the account balance as 0 U.S. dollars to all credit bureaus, including debts in your credit report; 5) Include exactly what the creditors intend to send to the credit bureau (if any) The wording indicates that the repayment is insufficient.
  8. Once you have a written settlement agreement that you can accept, you can settle the payment immediately, use the cashier's cheque or money order, and retain the receipt attached to the check or money order. Payments will be sent by certified mail, and receipts must be received from the Postal Service stating the date of delivery to creditors. Do not pay it at least 15 days before the settlement date of the settlement agreement until payment is received.
  9. Follow-up: Obtain a free annual credit report for every four months from one of the three reporting agencies. Examine the three free credit reports you will receive next year. If the settled debt still appears, the balance should be 0 USD. If the creditor agrees with the specific wording of any symbol appearing in the record of the claim, you should only see the wording.
  10. If the creditor fails to fulfill the written settlement agreement, do not waste your time contacting the creditor. Instead, immediately follow the Federal Trade Commission's procedure for dispute resolution of credit report information. Your evidence is from the written settlement agreement of the creditor, your cashier's check or money order receipt, and the postal receipt showing the date the payment was delivered to the creditor.

Finally, there is no legal advice. Consult a lawyer to ensure that a legally binding watertight settlement agreement is reached with creditors.

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