Do Debt Settlement By Yourself

Tina S
Tina S
Jan 24, 2010
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In these tough economic times many people are finding themselves drowning in a sea of debt.  Many people in this situation are tempted to turn to debt settlement companies for help.  Anyone who finds themselves in debt should be considering the best pay to get out of debt as quickly as possible.

With the economy in a downturn more and more people are interested in do it yourself debt settlement tips. Many want to save on the sometimes considerable cost of debt settlement companies - or want to know how to use the services of debt settlement companies constructively in their debt settlement plan.

Do It Yourself Debt Settlement is the easiest and most affordable process by which any person can negotiate their own unsecured debt, the name alone says it all. All negotiations and conversations with your creditors are handled strictly by you, "The Debtor".

There are no expensive fees to this process such as retainer or commission fees, this process allows you to stay in control of all negotiations and talks with your creditors; thus giving you a natural advantage over hiring an outside company to negotiate your debt for you.

 All you need is to follow the do it yourself steps to debt settlement, consolidation and management.

 1. Evaluate your debts:

Determine how much you can afford to pay in total for debt settlement. Write down all of your essential expenses, such as rent, mortgage, meals, gas, etc. Subtract this amount from your monthly net pay.

Collect all your financial documents and print out your credit reports to see exactly where you stand. This is an important step toward debt recovery and one that people are often scared to take. On a piece of paper, write down the balances, interest rates, and monthly amount due for each of your debts. Include your auto loans, personal loans, payday loans, credit cards, and other debts. You should also make note of any annual fees on your credit cards. You don't need to include your mortgage loan or student loans at this time. These loans have relatively long terms and low APRs so it is better to focus on paying off your other debts first. If you have an overwhelming amount of debt, you may want to request a free professional debt help consultation.

2. Look at your budget:

After you have collected the information about your debts, you should take a look at your monthly budget. Write down your monthly income after taxes and subtract your rent/mortgage payment from this amount and other monthly expenses such as childcare, student loan payments, insurance, utilities, and groceries. . Whatever is left over is what you can pay out each month for your debt settlement plan.
Make a list of all of your delinquent accounts and the amounts owed on each. Once you have subtracted all of your expenses, calculate how much you have left to pay off your debts. If this amount is too small, look for ways to reduce your spending. Consider turning off your cable subscription or carpooling as ways to cut back temporarily. The more you can pay towards your debts each month, the sooner you will be debt free.

3. Make a plan:

Now that you know all about your financial situation, it's time to create a plan for reducing your debts. Use your information from Step 1 and 2 to fill in the following chart. Subtract your minimum debt payments (Step 1) and monthly expenses (Step 2) from your monthly income after taxes. The remaining amount should be used to pay off the debt with the highest interest rate and the highest balance.

4. Creditors:

Beside each creditor's name and balance owed, write down how much of your debt settlement budget you can pay toward that account to settle it. The closer to 50% of the balance that you can get, the better chance you'll have of getting your offer accepted. Contact your creditors (or the collection agencies that are representing them), explaining your plan and how it affects them. Explain that your current financial situation simply won't allow you to make your payments as you agreed earlier.

Tell your creditors how much you owe in total, how much you have available to pay off all of your debts, and how much you can pay to settle their particular accounts. Let them know that your offer is being sent to all of your creditors, and the ones who accept the offer first will be paid off first.

Here are a few important things to keep in mind:

• Insist on getting all debt settlement agreements in writing, and never pay the amount agreed upon until you receive the signed written agreement. Your creditors could easily accept your offer on the phone, then "forget" about the settlement offer after receiving your payment.
• Keep all of the signed agreements and receipts for your records, even after the accounts have been marked "settled" on your credit reports.
• Be very careful with your finances in the future to ensure that you never have to go through the debt settlement process again.
• If you simply feel uncomfortable dealing with your creditors yourself (or incapable of doing so), you can select a reputable debt settlement company to do it for you (for a hefty fee). If you choose carefully, a good debt settlement company can do the entire process quickly on your behalf.
The Ultimate Solution

No matter which path you take the ultimate solution to debt is found by taking control of your life, and your money. Just figuring out where the money goes isn't enough. You must have internal control over your emotions, thoughts, and actions. By doing this you will gain the ultimate control that will allow you to build the life of your dreams.

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