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How do I start debt settlement on my own?

Jensen Beach, FL |

We have about $17,000 in unsecured debt and looked at going with National Debt Relief as a debt settlement. However, I'd really like to try this on my own, as they only do auto withdrawals from our account and I just don't trust that. What is the best way to start the process?

I've obtained the addresses for the debt collectors (most are not the original debtors but junk debt buyers) from my husband and I's credit reports. Any guidance would be appreciated.

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Attorney answers 6


Debt settlers generally head you towards bankruptcy. They take your money as you said, they wait until you are way behind, then they offer to buy or settle your debt for just a little bit of the money actually owed. If the debt collectors refuse, and come after you your only recourse may be bankruptcy. You might be better off to hire an attorney to settle your debt with an eye towards bankruptcy, and kill two birds with one stone.

Every legal matter is fact specific, and there are often nuances in every case. This is intended for comment only, and does not create an attorney client relationship.


The best way to approach credit card companies/ secondary creditors is to gather together all of your financial information before hand. Have a budget worked out that reflects all of your debt. Also, be prepared to explain why you cannot pay the full amount back. For instance; is there a medical condition and/or recent termination of employment which resulted in a drastic decrease in disposable income? Often times, these agencies will settle for between 40 -50% of the outstanding debt if a lump sum payment can be made. If none of the above scenarios apply, you may want to consult a debt resolution/ bankruptcy attorney to provide more guidance for you. Best of luck.

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Perfect thank you. Unfortunately for us, the reason we have fallen so far behind isn't medical. We had to leave our jobs and move back to Florida to tend to my mother-in-law and then were unable to find work...we are just now able to make payments on old debts since both of us have steady work. But I will give it a try, however I would also like the idea of the attorney for guidance as well.


Do not do auto withdrawals, and the settlement companies do not really help. You can offer to settle with each creditor for free, they will just pay a small amount each month and you will have to pay until someone won't deal and sues you.

You need to consult with a consumer protection or bankruptcy lawyer locally for private and specific advice on your particular issues.

Many lawyers on this site offer a free consultation and you can find one near you, make an appointment for legal counseling, and take your paperwork and a written chronological summary.

1. Start keeping a detailed log of all calls and letters and a paper file of all information. Because persistent violations of the FDCPA are punishable by statutory fines and attorney’s fees under federal law, but you need hard evidence.
2. Make a written demand that all further communications from creditors is in writing under 15 USC 1692 (c). The letter should also contain a dispute of the validity of the charges and include a demand for a complete accounting with signatures, and all contents of their file.
The creditor then has 30 days to reply and they may not take any action until you have been sent the validation. Bear in mind that this may be motivation for the collector to work your account when the file comes to them from the original creditor with new information.
3. Do not give them any personal information because that is how collectors decide on which accounts to recommend suing. Remember they may not tell the truth and will say just about anything to get a payment from you and that payment reaffirms the debt, gives them information about you and your bank and ability to pay.
4. If you are going to make payments use money orders only and never personal checks, wire transfers, money grams, or “check by phone.” If the collector finds a bank account, the collector will be more likely recommend a lawsuit to their legal department.
5. Collections are negotiable; the original creditor has given up and is losing up to 50% on the face value already either by splitting any return or selling at a huge discount. In addition, the costs of a lawsuit although discounted still are a factor in the decision to settle with you.
If you are going to settle mark the check “settled-in-full” at the very top back of the check and include a letter explaining that you are offering a settlement, keep copies of everything.
6. Get written confirmation of any payment plan the agency will accept before making a payment.
7. Specify in writing that all payments shall be applied to principle first.
If you’re ready to throw in the towel, go see a local bankruptcy attorney and explore your options for federal protection. The protection will even look back 90 days from filing, get back money taken by the collectors, and apply it fairly.

If your debt is with the government like the IRS or a State agency or for Child Support or taxes, the rules will be different and you will need a local lawyer at once.
DO NOT use a paid debt settlement service; most of them are scammers.
Links to your rights;

Debt validation template

Look for a qualified consumer protection attorney for a low cost or free consultation:
If this answer was helpful, please mark as helpful below. Be sure to indicate the best answer. Good Luck

You can search the Avvo web site under the Find a Lawyer tab. But always remember to act quickly because for every legal right you have, there is only a limited amount of time to actually file a lawsuit in court or your rights expire (it's called the statute of limitations)

Please be sure to indicate the best answer. If this answer was helpful, please mark as helpful below. Only. If and until you and I sign an Agreement for Legal Services, I am not your attorney. These answers are provided for informational and/or novelty purposes


The real question is should/can you settle? See the link below to my free report, The 7 Truths of Debt Settlement.

You need lump sum cash. If you are trying to settle $17K (by they way, is that an accurate balance, keep in mind that interest continues to increase the balance due)?, you should have $7K-$8K budgeted and ready to go with the goal of settling between $4250 and $7000.

Debt settlement is NOT about making monthly payments. The debt settlement agency you spoke to does monthly payments to accumulate the needed lump sum to settle. But in the mean time, no one is paying anything to your creditors. As such Your only leverage is the ability to give the creditor cash now, which is more valuable than an uncertain monthly payment over time (after all, from their perspective, you didn't make the payments previously, why would you again). If you don't have the cash, debt settlement is a non-starter.

Settlement negotiations only occur over the phone. Sure, you may get letters with offers, but you need to solidify the deal over the phone. You will insist the collector send a written confirmation of the settlement terms (only sleaziest won't do that). The best time to approach a lender about settlement is in the last 5-10 days of the month.

Lastly, you need to be aware of the tax consequences. If you settle $17K for $6K, the difference, $11K is taxable income.

Good luck.



I tried to get your free report but got this message instead: Mailing List Not Active This mailing list is not currently active. Please push the "Back" button and notify the website owner.

Matthew Scott Berkus

Matthew Scott Berkus


Thank you for letting me know. Instead, go to the home page of my website,, on the right side you will see a sign up form for the report. That box still works (I tested it), not sure why stand alone request page was not working. Thank you for letting me know.


You should consider contacting a bankruptcy
attorney in your area to explain the consequences
of debt settlement. Many companies charge large
expenses that are not revealed to the consumer.


Here is some advice:
1. Make sure that you have considered and rejected all of your other options (e.g. litigation, bankruptcy, dispute, consolidation, etc.)
2. Call at the end of the month. Collectors have a monthly goal, and are more likely to work with you at the end of the month when their goal is approaching.
3. Let the collector know your reasons for falling behind (e.g. lost job, new baby, divorce, illness, etc.)
4. Let the debt collector know you are considering other options (e.g. bankruptcy, consolidation, etc.)
5. Offer a lump sum. You will get a better discount with a lump sum than with monthly payments.
6. Document everything. Keep a diary of all of your contacts with the debt collector, including any letters or notes of conversations.
7. Start low. If your first offer is 90% of what you owe, the collector will never accept 89%.
8. Get it in writing before you pay a dime.

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