Posted on June 1, 2009 at 1:18 am So now I'm thinking of settling my debts with my creditors myself.My friend basically said that in a debt settlement program, I pay them a monthly fee, but for like 3 months or until I reached the amount (their 20% of my debt fee) I don't get to save for my actual debt. I feel a little off about it. Can anybody give me some tips on how to negotiate with the creditors myself?

Posted on June 1, 2009 at 1:41 am Hi, imissmyriam! Typically, creditors may offer you a certain settlement amount which is payable within a certain period of time. They will either send you the letter through fax or via mail. The letter will illustrate the terms of the settlement agreement.Has your account been transferred to a collections agency? Because you can also negotiate with the debt collector.

Posted on June 1, 2009 at 2:06 am With a debt settlement company, the process of saving money that you are going to pay them (for their fee) is almost the same process that you are going to do, if you decide to negotiate with the creditors yourself. Before you even call the creditors you would have to have money set aside to negotiate to the creditors with.

Posted on June 1, 2009 at 2:08 am Thank you Karess I think my account is still with the creditors

Posted on June 1, 2009 at 2:13 am Imissmyriam, how many offers have you gotten from the debt settlement company? Because while you can personally negotiate with your creditors, debt settlement firms can actually offer a higher settlement amount than what your creditor typically can. They can chop off as much as 70% on your balance. Some creditors only agree to a 25% discount of your loan, and it may get harder for you to negotiate if the account has been charged off.

Posted on June 1, 2009 at 2:26 am I've gotten just a phone call and I haven't really committed anything yet. Thanks for the heads up. I will think about it. 70% sounds like a good deal.

Posted on June 1, 2009 at 2:31 am If you are still in doubt or you still have questions regarding debt settlement, there is a form on top of this page that you can fill out. You'd get advice from the professionals for free.

Posted on June 12, 2009 at 9:00 am To address your original question, some debt settlement companies charge a "retainer fee" over the first 3-4 months of the program. Usually, the majority of your monthly payment would go towards that fee, and anything left over would go towards your escrow account for future settlements. While many people do not like this fee structure, keep in mind that most people are not past due enough during those first few months to receive good settlement offers anyway. On top of that, you have to consider the time spent between the client and the consultant (these consultations are almost always free) before they even sign up with that company, as well as the time and costs the company incurs to make sure everything is set up approriately for that new client.

Posted on July 30, 2009 at 8:33 am My friend discouraged me from enrolling in a debt settlement program because she said my creditors will just sue me anyway. Is this true?

Posted on July 30, 2009 at 1:19 pm It isn't likely that all of your creditors would sue you. Typically, past due accounts are turned over to a collection agency. And while the creditors reserve the right to pursue legal action to collect the debt, some are more likely to do so than others. For example, Capital One and Discover at this time are aggressive. Typically the creditor, if serious about filing a lawsuit to collect the debt, will forward the account to an attorney who is licensed in the state where you live for collection. At that time you should be able to work out some type of resolution if you reach out to the firm, whether it be a settlement or payment plan. Those options are still available for people who have already been sued as well.