Debt Settlement – Carry Out By Yourself

The best solution to fight against debt is self evaluation and introspection. That’s effective because only you how to deal with debts. Analyze your actual financial state and try to make an effective plan for it. That effective plan should contain some rules such as when to spend money, where to spend etc. You should avoid spending money on extra stuff to get a lifetime relief from all debts. Here we are going to tell you some important tips that will be effective to fix all your debt related problems by yourself.

Debt settlement by yourself

Debt settlement is the right choice indeed when you suddenly find your financial condition in a worst state. Bad financial state means the state when you even fail to pay off the least amount of money on your credit cards, bills etc. Debt settlement is much better than filing bankruptcy in such a bad financial situation. Debt settlement will help you to reduce your outstanding debt balance by 40%-60%, guaranteed. Try first to settle those debts that contain higher interest rates. The debt settlement of such debts will give you a big relief. Here is the complete guide to the debt settlement:

1- Calculate the total amount of your debts.

2- Evaluate the type and the age of your all debt accounts.

3- Ask a copy of your credit report from your creditors/credit bureaus and thoroughly evaluate it.

4- Check your credit report and search if you are still have an account with your creditor.

Debt Settlement of the debt with the creditor

Imply these steps to settle your accounts that are still with your creditors.

1: Know the right way to contact your creditor, such as:

- You should know the debt negotiation tips

- You should be ready to make move according to creditor’s mood.

2: Check the creditors’ database to take the address and other useful information about creditors.

3: Check how much you can pay to your creditor before contacting your creditor to decide about your monthly pay offs.

4: Contact your creditor and describe him/her your plan in detail. Convince them how they can take benefit from your plan.

5: Inform your creditors in anticipation that you are mailing your plan to a list of creditors and you will pay the first installment to the first creditor that will contact you first.

6: Keep all the data of the acceptance letters in record and the amounts that are fixed with your creditors. Request a receipt of your amount that you “paid in full”.

7: Repeat the same practice every month and keep on adjusting debt settlement offers.

8: After paying off the large amount of debt, send the offers of paying back high percentages of the outstanding amount to creditors.

9: If you keep on repeating the same practice every month then soon you’ll become debt free.

10: Take your fresh credit reports time to time to keep yourself updated for the status of your accounts.

11: After paying off all the debts, ask your creditors to update the account status on your credit report as “paid as agreed”.

What You Should Choose? Debt Settlement Or Debt Consolidation

There are number of ways to reduce your debt burdens. Some are very useful without side effects but some have their own issues. Debt settlement and Debt Consolidation both can relief you from your debts headache. which is the best one? the decision is up to you.

Here only I can highlight The Pros and The Cons of both of them. The Choice and Final decision is always yours.

Debt Settlement

Pros :

Settlement deals with immediate removal of a portion of your total debts by your creditors. Then you can easily manage your remaining part of loans over your budget.

Through debt settlement, you can see that your credit score is improving gradually. The relief from high repayments produces good effect on your credit ratings. Now you have more money to settle down your outstanding bills and debts which surely help you in improving credit score.

Cons :

The Debt settlement is seem to be just like Foreclosure. It means your credit rating will be on or below the threshold of 500 points. although you will improve it gradually but it takes round about 2 years and in the mean time you have to work with Sub-Prime lenders.

Debt settlement also effects your tax consequences. According to IRS, you have to pay some extra state taxes.

Debt Consolidation

Pros :

With the help of consolidation, you can now repaying your debts at a lower interest rate than before. After choosing this solution, you have to pay less monthly loan repayments. which gives you more money to spare.

You can be out of your debts in less time frame than before. Debt Consolidation deals with some paperwork, cancellation fees and other accounts closure.

Cons :

Consolidation affects the credit score up to some extent. Lenders temporarily hold the credit extension until you will be regular in your repayments. In the same time, you have to present your accounts for inspection that your debt consolidation company dealing rightly.

Conclusion With Right Decision

None of them is a perfect solution of your debts. Each one has its own points and disadvantages. Debt settlement gives you instance relief but it is against your credit rating interest. On the other hand, Debt Consolidation gives sigh of relief at credit rating point but its a time taking process. So you have to pick the right option which suits you best.