Do it Yourself Debt Settlement

You have seen the ads on TV, listened to them on the radio, and have probably gotten quite a few mailers, especially if you debt load is higher than average; they suprisingly include your debt load, or close to it, and catch your attention with words like "debt reduction program," or "you qualify for a debt reduction"

Did you know that these companies bought your information from the credit bureaus? And did you know that they did so illegaly? Companies are only allowed to purchase your credit information if they are extending a credit offer to you. But unfortunately these companies have access to your credit information because they were former mortgage companies (yes the same ones that got us in this mess) and they are buying your information under the guise of extending you credit but in reallity they are using it illegaly to market to you personally, using your actual credit information publicly on post cards (they are cheaper to send) exposing your debt loads to passerbys that see them!

What do these debt settlement companies have to offer you? Well, it depends on your circumstances, personal disposition, and time availability. If all those three line up correctly you might be better off doing it yourself. That's right you can learn how to negotiate your own credit card debt.

First of let me start by saying this: there is NO government bailout program that includes getting you out of your debt obligations. Run away from any companies trying to hype you up with these false statements.

Secondly, debt settlement law firms are not all what they appear. These companies have created a loophole to give an impression that they are law firms even if the owner of the company is NOT a lawyer. They have merely hired an attorney to whistle and walk around their company and from time to time speak with a prospect or a client.

These set ups are ILLEGAL, and you should not fall into the trap of "Lawyer Based Debt Settlement."

However, some companies are professional law firms, but it would be very hard to tell them apart, that's why they have not been busted. If you want a lawyer representing you, meet with them IN PERSON. Otherwise it's a joke.

When looking for a debt settlement company, you should hear the following NEGATIVE aspects:

1. It hurts your credit-BADLY, for the entire duration of the program you can forget about credit

2. You might get sued! That's right, if a creditor plays hardball they might seek to sue you, in which case getting a favorable settlement will be very difficult; probably in the 80-90%. However, you have very good chances of having the majority of your debt settled at lower percentages, depending on your hardship and size of debt. $40k debt has more chances of getting sued than $5k.

3. You will continue to get creditor calls NO MATTER what they tell you. Creditors have a right to call you and they will; you just need to learn how to handle the calls and make sure they are not violating fair collection practices.

4. You will owe taxes on forgiven debt. Meaning that a forgiveness of $10,000 will be considered just like income, so you must be prepared.

These are the major points any debt settlement should disclose to you. If they do not or try to paint a rosier picture, they are not for you.

Most importantly, one of the biggest downside is the fees. On average they charge you:

1. 15% of total debt

2. Some charge monthly processing fees as high as $89

3. Some charge a "set up fee" from $99 and above (those are pure commissions stay away from those companies)

So if you have about $10,000 in debt and choose to sign up for a program for 3 years, or 36 months, you could be paying them almost $5,000!!! That's half of what you owe!

On the other hand, the do it yourself method is much better AND the likelihood of you getting sued might decrease, because creditors prefer to work with you.

Here's what will be required of you:

1. Stop spending (I'm serious)

2. Create a budget

3. Gather all your bills and create a settlement plan

4. Build up savings for a settlement

5. Maintain proper communication with your creditors

6. Don't let collectors push you around

7. Settle your debt

Sounds easy? Well, it is and it isn't. Negotiating your own debt will require patience, discipline, and reasonable amount of skill in handling your creditors.

The upside is that you will avoid paying those enormous fees to debt settlement companies.

At MyBlueChimp.com we offer training on settling your debts with a do it yourself debt settlement system but more importantly we provide a community for personal finance education.

Here is a Summary of the Pros and Cons:

The pros:

-Settle debt for less than the amount owed

-Get out of debt faster than paying it all off

-Avoid bankruptcy if you are able to afford the process and have a smooth ride

-Once you are done you can reestablish your credit quicker

So really the benefit of the program lies in a quicker debt relief option and the avoidance of having bankruptcy on your record:

The cons:

-hurts credit badly for duration of the program

-you might get sued and get a judgment on your record (maybe even wage garnishment)

-you will get collector calls

-you will have to pay taxes on the debt forgiven