Settling Debts on Your Own - Dealing with Debt Collectors

Since credit counselors, debt management services, and attorneys all charge fees, you may be wondering whether or not you can "cut out the middle man" and settle your debts on your own. The short answer is, "yes, you can." However, it is rarely the best course of action.

Credit counselors, debt management firms, and attorneys all know more about how to deal with creditors than you probably ever will - unless you become a credit counselor, debt manager, or attorney - so they know the "tricks of the trade" to get things done. They can argue on your behalf in a dispassionate manner, and by hiring a professional, your creditor is going to know that you can't be taken advantage of. All of these factors normally combine to earn you savings that greatly exceed any fees charged by your professional representation. But you still want to go it alone, eh? Well, Debt Relief USA's aim is to be your one-stop debt management resource, and while we think it is normally best to hire professional help, certain debtors may find it within their best interests to negotiate on their own behalves. Therefore, we have collected a set of three tips for you to follow as you pursue debt relief, DIY style. Good luck!

Tip #1 - Never Negotiate Via Phone

Collection agencies always record their telephone communications with debtors for "quality assurance," but in reality, what you say on the phone can (and will!) be used against you. Unless you plan to also record the phone call - in which case you must get permission from the collection agency - you are at an obvious disadvantage. Furthermore, even if you do record the call, you are still at a disadvantage for two reasons: (1) The debt collector you're speaking with is a trained professional with extensive experience at his or her job. This is probably your first or second time doing this. (2) What the debt collector says may or may not obligate the agency for which he or she works, but what you say clearly obligates you. In other words, a promise made by the debt collector over the phone may not be enforceable, whereas anything you say "can and will be held against you."

Tip #2 - Correspond By Mail and Get Everything in Writing

Since the phone is out, this obviously restricts correspondence to written letters. Send everything via Registered Mail, Receipt Requested (this costs $3 or $4, but it's worth it). Save everything you receive from the collection agency and all letters you send to them. Before you pay them one dime, make sure you get the entire terms of your debt settlement agreement in writing.

Tip #3 - Know Your Rights and Your Leverage

You have something the debt collector wants - namely, money. Does the debt collector have something you want? Perhaps. You probably want to stop receiving letters, to have the debt marked as "paid" on your credit report, or to have it removed from your credit file altogether. First know that if phone calls are your primary concern, you can just tell the debt collector that you don't intend to pay the bill, and by law, they have to leave you alone. This law only applies to third-party debt collectors, not the original creditors. At this point, the debt collector would have to take you to court, sue you, win the case, and then, before collecting a dime, sue you again to have the judgment enforced. Is this likely worth the debt collector's time?

Realizing that it probably isn't gives you increased leverage. You also need to realize the fact that the debt collector purchased your debt from the original creditor, probably for as little as 10 cents on the dollar. So when they try to allege that you owe them the full balance of your debt plus penalties and interest, this is a farce. Debts are hard to collect, and they will probably be willing to settle for much less than 50% of the original value, let alone the bogus penalties and interest they've tacked on.

So the question you need to ask yourself is, "How much is improving my credit standing worth to me?" This is what you should be willing to pay to have the debt removed from your credit report. If the debt collector is unwilling to have the debt removed for whatever reason, offer a lower sum. Realize that you have leverage and time on your side. Most states have statutes of limitations on old debts of six or seven years, so in due time, your debt will be uncollectible under state law.

Of course, using a credit counselors, debt management firm, or attorney will make pursuing each of these tips that much easier, and you can find the right professional for you at Debt Relief USA. Good luck!

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