7 Tips For The Do-It-Yourself Debt Manager

AAA

For many people, admitting that they have a debt problem is as far as they want to go. After that, it's time to pass the baton to a professional debt counselor or credit repair company. For others, control is the key. If you are a hands-on type who understands financial issues, it's possible to tackle your debt challenges yourself - and you might even save a little money. Here are seven tips if you decide to go at it alone. (To get started, check out Digging Out Of Personal Debt.)


1. Put Some Money On The Table

Your lenders may want at least 50% of your overall loan up front (although that figure is negotiable). Note that some creditors won't even begin to negotiate until they receive some money from you, so be ready to put up some cash to prove that you're serious about getting out of debt.

2. Expect A Fight

Most creditors have agents or customer service reps to handle some debt negotiations. But at some point be prepared to see a lawyer get involved who is representing the creditor. Usually, there has to be a substantial amount of debt before this happens.

3. Send A Money Order

When you make a payment to your creditor with a credit card or bank account, you will be providing all of your pertinent banking information in the process. What's the problem? If you are sued, it's simple for the creditor to get at your funds through your bank account. So, make sure you pay with a money order.

4. Seek "Paid In Full" Status

Creditors will usually settle for less on the dollar so they can guarantee they at least get something back. This means you can expect to pay less if you agree to a lump-sum payment. However, you should also demand that the debt be shown as "paid" on your credit report. "Fully paid" or "debt satisfied" is the language you're looking for. "Debt still active" is not what you want. It never hurts to ask.

5. Bring A Lawyer

If negotiations go nowhere or if either party fails to live up to their end of the bargain, the lawsuits can start to fly. Being prepared for this will work to your advantage, so make sure you have a lawyer ready to go to bat for you if the mud starts to fly.

6. Be Realistic

You might be tempted to back down a bit and accept a repayment deal that is still too much for you. This is a mistake. Don't agree to any debt payment plan that you can't manage. Be honest. Tell them what you are willing to pay, and let them know if they demand more you could be forced into bankruptcy (in which case they will receive no payback at all).

7. Discover Your Creditor's Limits

If a creditor offers three months at no interest, ask for six. Always aim high and understand how much negotiating room you have to work with within your personal budget. Remember, the worst they can say is no.

Give It A Try

If you have the time, the expertise and the detail-oriented demeanor of a professional debt manager, settling your own debts might be a good strategy for you. Try starting off with a manageable 90-day trial period. If you've made solid inroads within that time and have negotiated your debt downward and your credit score upward, keep at it. If not, then it's time to call in a professional.
Related Articles
  1. Credit & Loans

    Top 5 Reasons Why People Go Bankrupt

    The biggest cause of bankruptcy in the United States is medical expenses.
  2. Home & Auto

    What to Do When You Can No Longer Afford Your Car

    Life is full of unexpected and undesired events, like layoffs or divorce. Unfortunately, these events can sometimes make your car payment unaffordable.
  3. Insurance

    Cashing In Your Life Insurance

    In tough economic times, tapping into a life insurance policy can provide a needed source of funds.
  4. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
  5. Credit & Loans

    Debt Forgiveness: How to Get Out of Paying Your Student Loans

    There are income-based plans and forgiveness for public-service employees. The latest wrinkle: loan forgiveness because the school defrauded you.
  6. Personal Finance

    10 Unfamiliar Ways to Help Pay Down Medical Bills

    Mounting medical bills can be frightening. But these out-of-the-box solutions can help you avoid ruining your credit rating when you don't pay them.
  7. Credit & Loans

    Business Vs. Consumer Credit Reports: What's the Difference?

    Find out the difference between a business credit report and a personal credit report, and why it should matter for business owners.
  8. Credit & Loans

    How To Lend Money To Family And Not Regret It

    Denying a family member’s request for a loan is hard to do, and not too common.
  9. Credit & Loans

    What Is the Lowest Credit Score?

    Learn about the different types of credit scores available to borrowers, and find out about the lowest scores under each one of those credit scores.
  10. Personal Finance

    Top 10 Investopedia Personal Finance Stories of 2015

    Every year is the year to start saving money, and 2015 was no different.
Trading Center