Debt settlements are a great way to reduce your debt and a good step towards salvaging your damaged credit.
Many people go through a third party in order to achieve this but there are things you can do yourself if you have the time and are willing to spend it on the phone, on the computer, and corresponding through the mail.
I guess it would help to establish a working definition of what debt settlement really is.
It is achieved by negotiating with the lender in order to obtain a lower interest rate. This almost always results in the closing of your existing account and a promise on your part to make timely payments at the negotiated price each month.
If you are one of the many who goes through credit counseling services in order to negotiate your debts, you may have the option of writing one check each month rather than writing several, this for many is a great option as they are guaranteed to make their payments on time each month and they only have to bother with one check (less work writing and less work with record keeping).
While many of the credit counseling services are ‘not for profit’ agencies, they do receive a good portion of their funding in the form of fees or commissions from the credit agencies they work with.
This means that while they claim to be working on your behalf, they do not necessarily have your best interests at heart. This reason alone is why many people choose to try to go through debt settlements through their own devices and ingenuity.
The thing to remember when setting out to negotiate debt settlements with your creditors is that is in their best interest to have you pay the debt, even at a lower interest rate (you will still be paying the original debt), than it is to have you declare bankruptcy and not pay the debt at all.
This gives you a little bargaining room when negotiating your debt. Creditors also appreciate an honest effort much more than excuses and broken promises. It is possible to do this on your own, but it can take a great deal of time and consistent effort.
This is the reason that many people choose to go the route of credit counseling services in order to negotiate a settlement.
If you decide to make use of one of the many credit counseling services that exist, be sure that you have all the relevant facts, figures, and fees before signing anything.
You might also want to be aware of the fact that when they negotiate on your behalf your credit accounts will be closed and you cannot apply for new credit while you are involved in the credit counseling process.
If the credit counseling service that you are considering pushed you to sign paperwork without fully explaining exactly what they will be doing for you or promises to provide you with perfectly good credit quickly for a certain fee, you should run away.
Debt settlements do not provide quick, instant fixes for your credit. It is a lengthy process that could, in some cases of high debt, take years to complete. Anyone who makes promises otherwise is someone with whom you should be extremely cautious about doing business.…