You might feel like you’re drowning in debt – avoiding answering the phone to numbers you don’t know – locking the door, drawing the curtains. But we want you to know that you can settle your debts on your own, and all you need are three things, one – commitment, two – resilience and three – the willingness to put in some research.
With these three things, you’re more than capable of seeking and securing debt relief on your own.
Here are our top tips for debt settlement – handled all by yourself.
Negotiating debt settlements takes time – from weeks to months, securing this form of debt relief is never entirely straightforward. This is where your commitment is going to come in handy. The second thing – resilience – will be needed to persevere if your creditors reject your initial offers of settlement (it’s very rare to be successful in your first few phone calls).
Over the duration of this debt relief process, you’ll also need to maintain excellent records of every correspondence you have with your creditors – be it by email, letter or phone.
We know how scary it can be to finally sit down and add up your debt, but this critical step is the very first stage of finally becoming debt free. So add it all up and write it down.
Presuming that you have a cash lump sum to settle these debts, you should then work out how much you can afford to offer each – splitting it equally between your creditors. Alternatively, if you’re hoping to set up an ongoing debt settlement agreement, you’ll also need to create an income and expenditure sheet, which will show you how much you can afford to pay a month on month.
Debt settlement is a type of debt relief that is only suited to those who are genuinely struggling with the weight of their debt. If you continue to meet your financial obligations, your creditors will have little reason to enter into a negotiated debt settlement with you.
You should note, however, that your credit score will be impacted once you begin to default on your debts. So you should ensure that this course of action is right for your circumstances, as well as having researched alternative debt relief solutions.
Debt settlement offers typically range at between 50 to 75% of the full debt. While you can try to negotiate at a rate lower than this, you need to remain realistic as to your prospects of success.
Be sure you know exactly how much you can afford to offer and communicate your exact circumstances to your creditors (providing evidence, if possible).
Creditors are far more likely to accept your offer of debt settlement if the settlement is readily available in cash. For this reason, it may make sense (particularly if you’re struggling to secure a promise from your creditors that they’ll freeze all interest and charges), that you sell assets to create a lump sum.
You can read more about the debt solution of selling assets here.
Unless you experienced some kind of financial emergency or a sudden change in your circumstances (such as losing your job or having to pay a huge emergency bill) then you’ll need to change your behaviours in the future if you aren’t going to fall into debt all over again. This is where an income and expenditure sheet will come in handy – as it provides you with a clear vision as to how much disposable income you must work with from week to week.
Feel like you need professional debt relief help? We’ll end as we started, by being honest. While individuals can settle their debts on their own, that doesn’t mean it’s for everyone. If you feel as though you can’t or don’t want to pursue your debt relief alone, there are tens of potential debt settlement solutions available that may be able to help.