Should I Stay With a Debt Settlement Company or Try to Settle Myself?

If you have a large amount of debt, debt settlement is an option that may allow you to settle your debt for much less than what you owe. When you decide to pursue debt settlement, you may hire a debt settlement company to handle it for you. You also may consider performing the task yourself.

Debt Settlement Companies

A number of debt settlement companies exist that can help you settle your debt. These companies regularly advertise on television and radio claiming to help you eliminate your debt quickly. These companies contact your creditors on your behalf and negotiate a settlement. You then agree to make a lump sum payment to the creditor in exchange for the closing of your account. The debt settlement company charges a fee for this service.

Fees

You may consider dropping out of a debt settlement program and handling it yourself to save money on fees. Debt settlement companies typically charge significant fees for their services. You might have to pay a percentage of the total debt or a percentage of the amount of money they saved you. In many cases, you must make installment payments on this fee before you can start saving for the settlement. By doing the work yourself, you could save this money and get your debt paid off sooner.

Scam Companies

Another reason you may want to handle this process yourself is to avoid the possibility of working with an unscrupulous company. Some debt settlement companies try to take advantage of consumers who are deep in debt. Sometimes, they make the situation worse. They may charge large upfront fees and never do what they promised. By doing the negotiation yourself, you can ensure no company takes advantage of you with a scam.

What is Involved

The process of negotiating a debt settlement is not complicated, but some people may not feel comfortable doing it. To facilitate a debt settlement negotiation, you must be late on your payments. Most creditors will not negotiate until you are three to six months behind on your bills. At that point, you can contact the creditor to try to negotiate a settlement. To save money, you may need to be a tough negotiator.