Negotiating with creditors for a manageable debt repayment strategy can save you money and cancel your outstanding debts. Informal debt agreements are a great way to reduce debt. But should you do it on your own? We’re going to talk about the five benefits to negotiating your debts on your own, instead of outsourcing the job.
- Get relief from debt overwhelm now
- Repay your debts in less time
- Avoid hidden fees
- Don’t pay for services that aren’t guaranteed
- Avoid bankruptcy
Get relief from debt overwhelm
When you find yourself having a true concern for your ability to repay debts to your creditors, debt settlement may be a viable option. It should never be anyone’s goal to use credit outside of his or her margins and negotiate smaller payoffs later. However, it’s completely understandable to consider contacting creditors when situations prove difficult and you know that you are unable to pay off the full amount owed.
While it’s not the best case scenario, settling debts with a creditor is a way you can pay off your debt in less time, and for a lower cost than if you followed your standard repayment schedule.
Repay your debts in less time
As stated above, debt settlement on your own allows you to pay off your debts in less time. With a good program, you’d be able to pay off your debts in full with an agreed-upon lump sum.
A creditor’s goal is to simply recoup the money leant to you. It’s far more expensive and time-consuming to have to begin the collections process, which may end in a lawsuit or leave debts unpaid for years to come. When you contact creditors to negotiate the debt down to an amount you can payoff all at once, they are highly likely to begin negotiating.
Avoid hidden fees
By electing to perform your own debt settlements yourself, you’ll save a significant amount of money. It’s common to work with debt settlement companies who charge anywhere from 18-25% of your total debt. Some may even require loan insurance and up front fees prior to even accomplishing any debt settlements.
Don’t pay for services that aren’t guaranteed
There is no guarantee that a debt settlement company can successfully settle with your creditors. Some creditors refuse to negotiate with debt settlement companies. They also have a reputation for accepting your fees up front, and failing to settle debts in a timely manner, which only leaves you with a suffering credit score and the potential for legal proceedings to begin, or continue.
When you take it upon yourself to settle your own debts as soon as you realize you cannot make the repayments under your current terms with your creditor, you’re more likely to avoid bankruptcy.
The best way to consider how to settle your own debts is to first reach out to a debt counsellor. He or she will not charge you for their services, and instead, will offer valuable advice that’s suited to your specific financial situation. You can learn how to negotiate with creditors, set a budget for your current circumstances, and gain insight on specific steps to take towards your financial freedom.
Take time to speak with a reputable counsellor for free, and learn how you can settle your debts on your own.