My Loans Consolidated

If your debt is now becoming more and more difficult to pay off and you are even struggling to pay the minimum every month, what you need to do is to try and settle your debt. Debt settlement means negotiating with creditors or collection agencies to have them reduce your debt amount by 40-60 percent or even more if possible.

Before you pick up the phone to negotiate your debt, make sure you follow these steps first.

1. Calculate your total debt amount.
2. Analyze the type and age of your debt accounts.
3. Get a copy of your credit report from the credit bureaus and analyze it. Check out Sample Credit Reports from the 3 bureaus.
4. Look through your credit report and find out if your account is still with the creditor or turned over to a collection agency.

When you have done all the steps above and have all your info handy, you are ready to start negotiating. You need to know how to contact your creditors. You can easily find the address or other relevant information in the Creditors Database. Check out the mailing instructions also for further help.

Be sure that you have decided a payment that you can afford to pay. After you have calculated all your debt, you should calculate all your income and figure out how much you can offer to your creditors to pay off your debt. When you have done this, it is time to pick up the phone and negotiate with them.

Here are the steps you should take when negotiating with your creditors:

1. Contact your creditors and explain your plan. Tell them how they can benefit from it.
2. Explain to them that you are sending this offer to all other creditors and that the ones who accept the offer first will be paid first.
3. If they accept, the records of acceptance letters and then immediately pay the amount as agreed. Do not forget to request a receipt that states, “Paid in full”.
4. Repeat the process every month until you pay off all your creditors.
5. Every year, it is important that you obtain fresh credit report so that you are updated on your account status.
6. When you have paid off one debt with a creditor, negotiate with them to update the account status on your credit report as “Paid in full” or “Paid as agreed”.

If you are negotiating with collection agencies, here are the steps to take:

1. Send a letter or email to the collection agency and don’t contact them by phone as they may behave badly to you over the phone.
2. Keep the name and direct phone number of the collection agency that replies to you.
3. Send a debt validation letter that verifies that you owe the money. When you receive a reply from them ask them to send you the following:
   • Proof that the collection agency is indeed assigned to collect the debt by a creditor
   • Detailed payment history starting with the original creditor
   • Copy of the original signed debt agreement or credit card application
4. If you find that they can not send them the above, tell the collection agency that they are violating the FDCPA and they need to remove collection listing from your credit report. Note that you have the right to sue them if they don’t.
5. If the collection agency validates the debt and it turns out that you do owe the money, contact the creditors to request them to pull your account back from the collection agency. Make your creditors aware of your inability to pay off your total debt and offer them an alternative payment plan. If you have enough money, offer them a lump sum reduced payment.
6. If your creditors don’t pull back your account from the collection agency, the debt negotiation should be done with the collection agency. Make sure you do that with a cool brain. When you have agreed on a settlement, make your payment in such a way that you get a receipt.

If you think you won’t be comfortable talking and negotiating with your creditors or collection agency, you can always turn for help by debt settlement companies or law firm. They will be doing the negotiation for you on your behalf. If you decide to do this, go for a no-obligation free debt counseling to have the company assess your financial situation. They will help you decided how much they will be negotiating for.

Here is a debt settlement company that can help you. http://sunrisedebt.com/

For more information about debt settlement companies in your area, click here.

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