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. In some cases, a financial advisory or attorney might even be brought into the picture.

However, for others, control is the key. They want to feel in control of all correspondence, phone calls, negotiations and other issues that come part and parcel with debt management.

There are pros and cons to both sides of the issue. If you are a hands-on type and understand financial issues, it's possible to tackle your debt challenges yourself - and you might even save a little money. But if the thought of negotiating with creditors, writing strong letters to credit bureaus and all those other tough tasks send you swooning, then hiring a reputable debt management professional is a good way to go. In this article we'll explore both paths and then provide seven tips if you decide to go it alone.

Being Your Own Debt Manager
The primary advantage of being your own debt management advisor is that nobody knows your personal financial situation like you do. There's no explaining to a third-party advisor what debts you owe, how much money you've borrowed, or any medical issues or job loss issues that contributed to your debt problems.

The downsides are notable, however, and you will need to ask yourself some hard questions:

Do you have the time to train yourself and learn about debt management?

Do you have access to key debt and lending decision makers at financial institutions, credit agencies and the credit report bureaus?

Can you absorb the financial shock of further debt if your calculations are off?

Are you detail-oriented? (People who are make good debt managers - those who aren\'t, don\'t.)

Knowing the answers to these questions is essential when you begin doing your own debt negotiations with creditors and lenders. It's a do-it-yourself approach that comes with some risk, but if you know what you're doing, you just might save your own bacon if debt gets too heavy.

DIY Debt Negotiation
Debt negotiation, also known as debt arbitration or debt settlement, is a sensitive yet critical issue. Basically, debt negotiation is a last resort before you start looking at bankruptcy - a route that definitely requires professional help.

Some issues will be easy to work out, like an old utility bill from college that suddenly pops up on a credit report. You're sure you paid your half, but it appears your roommate wasn't so reliable. In these instances, debt negotiation tends to be much simpler and can be resolved with a short payment plan at, for example, no interest payments.

The idea behind do-it-yourself debt negotiations is to reduce or minimize the payments you make to a creditor who you are likely already in arrears with. You can begin by contacting the creditor directly and seeing if they're amenable to you skipping a payment, knocking a few bucks off your payment or, as mentioned above, eliminating any interest payments. At the very least, it doesn't hurt to ask.

Another solution is to consolidate your debts. Consolidating usually buys you some time and bundles all of your loans and debts into one payment.

Tips for the Lone Wolf
If you do handle your own debt negotiations, be prepared to:

  1. Pay some money up front.Your lenders may want at least 50% of your overall loan up front (although that figure, too, is negotiable). Note that some creditors won't even begin to negotiate until they receive some money from you.
  2. Be ready to deal with an attorney. 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 for any credit payments. When you make a payment to your creditor with a credit card or banking account, in the process they have obtained all of your pertinent banking information. 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 for 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. Again, it never hurts to ask.
  5. Bring a lawyer to bolster your defense. If negotiations go nowhere, or if either party fails to live up to their end of the bargain, the lawsuits can start to fly. It's to your advantage to be prepared early.
  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 pay. Be honest. Tell them what you are willing to pay, and let them know if they demand more you could be forced into bankruptcy (where they will receive no payback at all).
  7. Find out how far the creditor is willing to go. 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.

If you have the time, the expertise and the detail-oriented demeanor of a professional debt manager, it may be the right path for you. Try starting off with a manageable 90-day trial period. At the end of that time, if you've made solid inroads and have negotiated your debt downward and you credit score upward, keep at it. If not, then it's time to get a professional.

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