7 Tips For The Do-It-Yourself Debt Manager


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. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  2. Credit & Loans

    How To Minimize Holiday Debt Before It Happens

    Holiday expenses can drown you in debt. Find out how to avoid this festive spending hangover.
  3. Credit & Loans

    The Basics Of Lines Of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  4. Budgeting

    10 Financial Habits That Will Lead to Bankruptcy

    Learn 10 easy financial mistakes that can lead to ruin even for responsible people, including the hazards of ignoring credit scores and letting bills stack up.
  5. Investing

    How to Raise Your Credit Score Quickly

    Here are the best tips for raising your credit score quickly.
  6. Credit & Loans

    Getting Your Name Off A Cosigned Loan

    If you want to remove your name from someone else’s loan, there are four key ways to do it.
  7. Credit & Loans

    How Credit Card Delinquency Works

    When you pay less than the minimum monthly payment on your credit cards, you become delinquent.
  8. Insurance

    How To Find The Right Credit Counselor For You

    Paycheck to paycheck is no way to live. Learn how to find the help you need.
  9. Home & Auto

    Is Making Biweekly Mortgage Payments A Good Idea?

    Some people believe making mortgage payments every two weeks, as opposed to once a month, can chop years off of a home loan. But is it really a good idea?
  10. Personal Finance

    5 Reasons Inmates Should Be Taught Financial Literacy

    Learn five reasons why financial literacy is a great way to prevent inmates from relapsing into a life of crime after release from prison.

You May Also Like

Trading Center