Do-It-Yourself Debt Settlement by Robert Allen

You avoid answering the phone. You receive notices in the mail. You fear you will lose everything: your house, your car, and all your possessions. The fact is this dilemma is being faced by more and more people. The increasing unemployment rate, lack of emergency funds and overspending has created widespread financial catastrophes. Instead of ignoring the calls and the notices, it is time to deal with the situation. Debt settlement is one option.

Collection agencies
Robert Allen discusses debt recovery in his Debt Reversal book. A collection agency can be a company who purchased the debt, a company who has been assigned to collect the debt or lawyers who send letters to collect the debt. Too many times consumers who fall into debt feel the only viable solution is to file bankruptcy. A few preliminary steps can be taken when a collection agency calls. Determine whether the debt is older than your state’s Statute of Limitations. Also, if a debt is older than 7 years, it should no longer appear on your credit report. If it does show on your credit report, ask for a debt validation to remove the negative mark.

Secured versus unsecured debts
If the debt is more recent, there are options. Debt Reversal by Robert Allen explains how do-it-yourself debt settlement works. There are two types of debt: secured and unsecured. Secured debt, such as a home or an automobile, is promised if the borrower defaults on the loan. Secured debts cannot be settled; the creditor repossesses the real property. Unsecured debt includes medical bills, credit cards, department store cards, personal loans, student loans and bounced checks. Unsecured debts do not have real property promised as repayment; these are the loans that creditors are willing to settle if terms can be agreed upon.

How much to offer
When negotiating with a collection agency, it is best to correspond via letters. This allows for a paper trail of all communications. In his Debt Reversal book, Robert Allen stresses that anyone is capable of negotiating a debt settlement. It should be noted that most bad debt companies receive pennies on the dollar for the debts they are trying to collect. The first offer should be at 25% of the total due. For example, if your debt is $1,000, the first offer should be $250. It may take time to work out an agreement, but time is your ally. The longer the debt is outstanding, the more concessions may be made by the collection agency.

Negotiate your credit rating
Author Robert Allen in his book Debt Reversal states debt settlement can achieve positive results. Another consideration is how the debt will be listed on your credit report. If dealing with a collection agency, insist on complete removal. You can then contact the original creditor and advise them that the debt was settled and your account needs to reflect this. If complete removal is not agreeable, then counteroffer and ask that the account is listed as “paid”. A “paid” notation on your credit report is considered neutral and won’t lower your credit score.

You can reverse debt by settling your outstanding debts.