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Stop sending payments to your creditors and instead, send it to a secure account where you will grow your settlement fund.
Wait until the creditors realize that you have stopped paying them off. In a month or two, expect the calls to start.
Talk to the creditor and explain how you are in a financial crisis and you cannot afford to pay off your usual payments.
Expect that the calls will worsen over time, just stick to your story while continually increasing your settlement fund. Mention bankruptcy every now and then.
Start mentioning debt settlement around 4-6 months after you first defaulted on your payments.
Create a debt settlement plan that you can propose to your creditor/collector.
Begin haggling with the creditor/collector to allow you to pay a portion of your debts. Start with a figure that is lower than the settlement fund that you raised so you have room to negotiate.
Keep a record of everything that you have communicated and agreed on. Put everything in writing, send it to the creditor/collector and include a return receipt.
Upon agreeing on a settlement amount, make sure you have a signed document that proves the creditor/collector will forgive your balance once you have completed the agreed payment.
Pay off the creditor and close the account.
It is important that you also educate yourself further by going back to the FTC site to know your rights as consumer. There are various laws that will help you like the the Fair Debt Collection Practices Act or FDCPA. This will help you identify when the creditor is being abusive or threatening. You can also file a complaint through this site.
Here are more tips that you can look into to help you arrive at a successful debt settlement:
Never agree on an amount you cannot afford.
Be consistent with your financial crisis story.
Be patient and never rush to get an agreement.
Always document your communication.
Check if you are negotiating with the people who have the authority to decide on your account.
- Do not take it personally, be polite and always keep a cool head.