In a slowing economy where lay-offs are high, and job prospects are low, debt settlement has become the only option for many families who are struggling to make ends meet.
If your monthly credit card payments are too high for you to afford, then this option can keep you out of bankruptcy and stop the collection calls as well. Many consumers believe that they have to hire a debt settlement company in order to negotiate their debt, in all actuality; you can do the exact same thing that these companies would do, and save yourself thousands of dollars in interest and fees in the process. Most settlement companies can settle a debt at about 40%-60% of what is owed on each account. There is no reason that you can’t do that yourself, if you have the patience and the know-how.
Héctor Milla Editor of the "Best Debt Relief Programs" website -- http://www.CreditCardDebtSettlementUsa.com -- pointed out;
“…The first thing that you need to do is grab a notebook and write down all of the money that you owe to creditors and can’t afford to pay. Take note that credit cards, medical bills, store cards, and short term loans are all allowable debts that can be settled in this process. Be sure to find any statements that you have on the debt that you need to settle. Place all of the information in one notebook and create dividers for every creditor that you have. The first and most important thing to do when settling your own debt is to stop making payments to your creditors. In the first month that you miss payments, your creditors will not let on that there is a possibility to negotiate your debt. They will tell you that you will incur late fees, and your credit will be negatively affected. This is all true; however, remember what your goal is, to negotiate your debt as a debt professional would do…”
After you stop making your regular monthly payments to your creditors, take the money that you would normally pay, or as much money as you can come up with, and put it into a separate bank account from where you pay your everyday bills. A savings account would be a good option. Now, each and every month you will need to take that money and deposit it into your new bank account. The difficult thing to realize is that this process will not be a quick one. You must build up funds in your separate bank account in order to pay your creditor the negotiated amount after a settlement is reached.
Now, since you are not making payments to your creditors any longer, the collection calls will increase. At about the second to third month of missed payments, the creditors might give you a little glimmer of hope that they will settle your debt for less than you owe. Keep stocking up the money in your bank account and wait a few more months. Tell your creditors that you would rather negotiate the debt with them rather than declare bankruptcy. At about the 6 month mark, you will probably start getting calls from your credit card company, asking if you will be ready to settle with them.
“…The process could take anywhere from 6 months to 2 years, all depending on how much money you can build up in your separate account, and depending on how much your creditors are willing to negotiate. I had a credit card company offer to settle my $9,000.00 debt for $1,800.00! It will take time, and your credit will not be stellar, however, over time your credit number will increase, and you will have saved thousands of dollars in debt without having to declare bankruptcy…” H. Milla added.
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