How to settle credit card debt yourself
According to the United States Government Accountability Office, per the Federal Trade Commission and individual state investigations of the Debt Settlement industry, less than 10% of consumers who enrolled in a debt settlement program completed it.
This is why if you’re debating debt settlement, you first want to evaluate if you can settle your credit card debt right away. If you can’t, your best alternative is to learn how to settle your debt yourself.
When you settle your debts over an extended period of time, your creditors will generally mail you periodic settlement offers automatically. Generally speaking, the more delinquent your accounts become, the more lucrative the offers become.
Most consumers who have hired a company to settle their debts one-by-one, over time, would tell you that they could have settled the majority of their debts on their own.
Why are debt settlement success rates so low?
One of the biggest reasons why debt settlement companies or attorneys have a low success rate is due to their representation and involvement on accounts where the consumers lack the funds to settle. You do not want to be represented prematurely.
Most consumers are unaware of this due to never being in the situation before, but hiring a debt settlement company to represent you before you have a financial solution available will have a negative impact on your chances of success.
The logic becomes this: if it is not in your best interest to be prematurely represented, then why pay all those debt settlement fees when you should be managing your communications anyway?
The problem with this industry is that some debt settlement companies will use the aspect of immediate representation as a way to gain you as a client, since one of your main concerns is the handling and management of phone calls.
What you generally don’t know, or aren’t told, is that as soon as a debt settlement company notifies your creditor of their involvement, when no potential to settle exists, your chances of being sued go up dramatically.
Let’s look at it from a common sense perspective…
Think about this. Let’s pretend that you’re selling your house. A realtor contacts you and makes an offer to buy it. However, they explain that they can only pay 30% of your asking price and that they can’t send those funds to you for 3 years.
Sounds insane doesn’t it?
Now imagine you’re a creditor, and a debt settlement company or attorney contacts you and does the same thing.
What would you do if you were that creditor?
I understand how you feel. You want to address your situation and do the right thing. I can confidently tell you that hiring a debt settlement company or attorney to contact your creditors to tell them that you potentially lack the means to settle with them for 3 or 4 years will not accomplish that.
You are far better off maintaining your anonymity by managing your communications with your creditors on your own.
If you weren’t, I would offer the same services other debt settlement companies do. But I don’t, because the reality is this: if I called your creditors when you lack the ability to settle, I would potentially make your situation worse and lower your chances of success.
Here is a link to the United States Government Accountability Office’s report. DEBT SETTLEMENT Fraudulent, Abusive, and Deceptive Practices Pose Risk to Consumers. The reference to the 10% success rate can be read in the first paragraph, on the second page.
If you’re contemplating the idea of settling your debts, please don’t jump in head first. Please refer to my 4-part series about how debt settlement really works.
How to settle debt yourself
From 1/1/2002 – 5/31/2019, 95.77% of all enrolled accounts have been settled or have entered into a payment plan. This dramatic difference is due to me only enrolling accounts that my clients have the financial ability to settle right away. In the 18 years that I’ve offered a debt settlement service, I’ve never offered a long-term plan. It’s a pipe dream. And you’re a duck in a barrel to the long-term debt settlement industry because you have never been in this situation before and you don’t know any better.
The bottom line is if you want to successfully settle your debts, you’d better figure out how to do it fairly quickly. These 36-48 month debt settlement programs that you see and read about: run!
The key ingredient to debt settlement success is possessing the financial ability to settle. Without the ability to settle right away, you subject yourself to a lot of uncertainty. And the longer you remain exposed to those uncertainties the greater your risk of being harmed.
I urge you to read my article about debt settlement pros and cons after you’ve read this article. Just so you can familiarize yourself with the things you need to know about before you decide on your approach.
So, if you can’t settle your credit card debt right away, but are still leaning toward the concept of debt settlement, you really don’t want to participate in a program that will take longer than 12-24 months. However, if you go this route, I strongly suggest settling your debts yourself.
I understand that sounds daunting. I get that. You’re unfamiliar with the particulars and your fear of the unknown makes the idea of settling your debts yourself a scary and overwhelming proposition. That’s why I’m so excited to be able to introduce you to two wonderful companies that specialize in training and coaching you to do just that.
Customers of ZipDebt and the Consumer Recovery Network quickly learn that settling some or all of their debts themselves saves money in professional fees. This cost savings can enable consumers to settle their debts more quickly, which greatly enhances their chances for success
What are the differences between hiring a debt settlement company and a DIY debt settlement coach?
From my experience, the most beautiful thing about ZipDebt’s and the Consumer Recovery Network’s DIY Debt Settlement business model and approach is that when you settle your debts over time, you’re really not doing anything different than if you hire a company to do it for you.
Most of their DIY clients only seek professional assistance for their most challenging accounts.
And, when they do, they’re paying 10-15% of what they save rather than up to 25% of what they owe.
How do I settle debt myself? What do they teach me?
- They breakdown your finances and determine how much you can afford to accumulate monthly.
- They approximate how much money you will need and how long it should take you to settle your debts.
- They review specifically who you owe and determine if you have any potentially legally aggressive creditors.
- They create a debt settlement timeline, where they detail the order in which you should settle your debts and the approximation of when you will be able to do so. Example: Settle with ABC Bank at month 6 for about 50%, settle with XYZ Bank at month 11 for about 50%, and so on.
- They help you form a strategy to submit offers to your creditors by helping you figure out the best angle to take and by creating a presentation that demonstrates the reasons why your creditors should settle with you.
- They discuss how to manage and communicate with your creditors while you’re accumulating funds.
- They teach you what may happen to your accounts as they age and go through the collection cycle.
- They explain how collectors view your ability to pay, so you’ll know how to act accordingly.
- They arm you with the information of what your creditors, collection agencies, or collection attorneys have settled for.
- They teach you how to communicate and negotiate by discussing what information to share, how to make your offer, when to make your offer, and how best to negotiate.
- And finally, they teach you how to handle the transactions when paying your settlements, so you’ll know exactly what you need and what to do.
What follow-up options do I have?
Whenever you find the need, you may talk with an expert at ZipDebt and the Consumer Recovery Network about how to settle debt and your updated situation. Their services are designed to coach you throughout the entire process.
What if I have trouble and need professional help?
If the funds to settle are available, you may enroll the account into my debt settlement service. I charge 10-15% of what I save you.
DIY debt settlement fees
You may have already discovered that the typical debt settlement fee is 20% of what you owe. For a consumer with $42,000 in credit card debt, the typical debt settlement fee is $8,400! The fees that are charged by ZipDebt and the Consumer Recovery Network are a fraction of that.
Time to complete DIY debt settlement
The typical debt settlement program lasts from 36-48 months. I don’t recommend attempting debt settlement unless you can afford to settle your debts in 24 months or less. And ideally, you want to settle them in 12 months or less.
The reason: while you’re in a debt settlement program you’re not making any payments to your creditors. Meanwhile your creditors are pursuing you for collection. So when you agree to enroll into a long-term debt settlement program, you’re agreeing to play financial chicken with your creditors for the duration of your debt settlement plan.
This is dangerous for you when you consider the likelihood of being sued once you go beyond 12–18 months of delinquency.
So the common-sense trick to successfully settling credit card debts is to settle them before those lawsuits start happening. Which means if you can’t settle your credit card debts fairly quickly, you want to consider a different debt relief option.
By learning how to settle debt yourself, you could potentially convert a 36-month debt settlement program into 24 months by saving thousands in debt settlement fees.
Time to rehabilitate from DIY debt settlement
It generally takes 2 years for consumers to recover from debt settlement once they resolve their last delinquent account. So, the quicker debts can be settled, the faster the rehabilitation takes place.
In a typical 3-year debt settlement program, if the program is completed on time, it may take 5 years to reestablish your credit from start to finish. It is important that you know that people generally reestablish their credit within 2 years after Chapter 7 bankruptcy.
This is why it’s important to reduce your exposure to debt settlement fees. If you settle your debts yourself, you may potentially lower the amount of time it takes to settle your debts by up to 30%. Thus, you may potentially rehabilitate about 30% sooner as well.
Which means if you have been talking to a long-term debt settlement company about a 3-year debt settlement plan that if you did it yourself you would more than likely reduce the time it would take to settle your debts from 3 years down to approximately 2.
That’s what that 30% difference in expense does for you. It’s huge! Especially for people who otherwise thought that they had no other choice but to participate in a unreliable long-term debt settlement program.
I hope this information about how to settle debt with DIY debt settlement helps you. Please feel free to contact me with any questions.