Your Legal Rights at Work

4 Tips For Negotiating Your Own Debt Settlement

by Lewis Hamilton

Owing money creditors can be very stressful, especially when they are calling you daily to ask where their money is. If you are struggling to pay off your debt for credit cards, loans and other financing, you may be able to negotiate a debt settlement plan on your own. Follow these tips for preparing a debt settlement if you have accounts that have become delinquent.

Know What Debt You Have

The first step to settling your debt is being sure you know how much debt you have and who you owe money to. If you have not done so yet, request a copy of your credit report from all three major credit bureaus, including Equifax, Experian and Transunion. Some debt is only reported to certain credit bureaus, so you should really have a copy of each one. Look at the items listed as collections, what their status is, how long they have been open, what you owe, and who to contact. You need this information so you contact the right creditor.

Contact the Creditors

Once you know what debt you have, you can start calling the creditors one-by-one. Have a game plan before you call them where you know exactly how much you can pay back on a monthly basis, or if you want to give them one lump sum. Some creditors will let you pay less than what you owe to clear the debt, as long as you send payment promptly. Others require the full balance to be paid, but will accept small monthly installments. When you are put on an installment plan, ask them to report this to the credit bureau so the status for these collections changes.

Explain Your Situation

If the creditors are giving you a hard time when you contact them and are not willing to settle the debt, explain your situation. You will find that some creditors are sympathetic to your plight, so don't be afraid to be honest about your divorce, loss of your job, or illness in your family. While it won't excuse your debt completely, they might be more willing to work something out with you.

Get it in Writing

When you and the creditor agree to a debt settlement arrangement, make sure you get it in writing. Request a written agreement that shows what the new terms are. While you wait for the creditor to mail you an agreement, type up your own document so that you have it for your records. Note the date and time you spoke to the creditor, what their name was, and details about your new arrangement.

If you are struggling to handle the debt settlement on your own, contact an attorney (such as one from Stuart Simon Law Firm) who specializes in financial issues and debt collections.