Before we continue, there are a few things you should know:

-We are talking about settling credit card debts only. This information doesn’t apply to other types of debts such as auto loans.

-You can hire a service to settle your debts, or you can try to do it on your own. It’s never guaranteed that a creditor will agree to a settlement, regardless of whether it comes from you or from a professional settlement company, but generally speaking creditors tend to be more cooperative with debt settlement companies than with individuals. If you want to go with a professional service, I recommend Curadebt.

-Please be advised that debt settlement should be a last resort; you should only use it when your only other alternative is bankruptcy.

-Credit card debt settlement can frequently reduce your debt by 30-70%, but it is not a “get out of jail free card”; you will likely have to pay income tax on any forgiven debt, and your credit score will also be adversely affected (although a settled debt is much better than a bankruptcy).

Now that we have all that out of the way, here is how to settle debts on your own.

First things first: do not attempt to negotiate a debt settlement with anyone other than your original creditor. If your account has been referred to a third-party collection agency, do NOT have any dealings with them.

In that case, contact the credit card company and inform them that you have fallen on hard times and may be forced to file for bankruptcy if you can’t find a way to reduce the amounts you owe. This should cause them to sit up and take notice, because chances are they would rather settle with you and get some of their money back, rather than let you file bankruptcy, which would probably leave them with nothing.

Bear in mind that in most cases, your account must be seriously past due before the creditor will be willing to consider settling. If you’re currently making payments on the account, you will need to stop before you approach the creditor about a settlement. Many credit card companies won’t settle until an account is approaching 180 days past due, at which point they will often “charge off” your debt and sell it to a junk debt buyer, usually for just pennies on the dollar. Clearly, it would be in the creditor’s best interest to settle with you because even if they reduce your debt by a significant percentage, they will still make more money than they would by selling your unpaid debt to a third party.

Once the negotiation process begins, proceed carefully. You should send all correspondence via certified mail with a return receipt, and be sure to keep copies of everything. If you speak to anyone over the phone, document the date, time, and name of the person to whom you speak.

Be patient and expect the process to take time; it can take anywhere from 3 to 9 months to reach an agreement on a debt settlement.

Once a mutually acceptable settlement amount is agreed upon, insist that you receive a copy of the agreement in writing before you make a payment. Be sure to ask the creditor to state in writing that they will never sell your forgiven debt to another party. This is important, because if they do that, you will then have a junk debt buyer harassing you for the remainder of the balance on that account.

Remember, if you don’t want to settle your debts on your own, or if you try but don’t get anywhere, you can always hire a debt settlement service. I personally recommend Curadebt because I know them to be ethical. If you decide to go with any other company, be careful who you choose. There are a lot of scams out there so don’t commit to any settlement service without researching them thoroughly first.

Post from: Credit Repair and Debt Solutions

Debt Settlement Tips

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