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Do-It-Yourself Debt Settlement

Created: On January 7, 2010 @ 9:38 pm In

You’ve probably seen ads for companies offering to settle your debt. But most people don’t need to pay someone else to put together a [1] debt settlement program. Here are five things to remember about negotiating a debt settlement.

  1. Not everyone qualifies for debt settlement. Most creditors won’t discuss [2] debt settlement with people who aren’t in serious financial trouble. If you ran up credit card debt and earn enough money to pay it back, don’t expect to qualify for a debt settlement program with your creditors.
  2. Debt settlement won’t happen overnight. The poor economy has led many folks to contact their creditors to negotiate debt settlements. It may take several conversations with your creditors to finally get approved for help with debt.
  3. Using a debt settlement company may actually hurt your case. Some creditors only want to discuss debt settlement directly with consumers. 
  4. [3] Debt settlement companies charge fees. They charge maintenance fees and interest. Also, debt settlement programs may require you to deposit money into an account and wait until you have enough to pay off your debt. Instead of depositing money with a debt settlement firm for future payments, why not just set up a payment plan directly with your creditors.
  5. Plan to give Uncle Sam his cut for your debt settlement. The government taxes the amount of any money forgiven in a debt settlement. For example, if you settle a $15,000 debt for $9,000, you’ll owe taxes on the $6,000 that was forgiven.

A do-it-yourself debt settlement program requires tenacity and patience. Stay in contact with your creditors to make sure any payments you send through a debt settlement are  applied correctly to pay off your debt.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2010/01/07/do-it-yourself-debt-settlement/

URLs in this post:
[1] debt settlement program: http://www.debthelp.com/blog/2009/07/13/debt-settlement-five-things-to-consider/
[2] debt settlement: http://www.debthelp.com/blog/2009/06/17/credit-card-companies-more-receptive-to-debt-settlement/
[3] Debt settlement : http://www.baltimoresun.com/business/money/bal-bz.ambrose05jan05,0,1747851.story