With the rise of Google, Pinterest, and YouTube, it seems like the “do-it-yourself” movement has become all the rage. With just a quick search, we are able to teach ourselves how to knit, cook a four-course meal, and retile a bathroom floor in practically minutes. DIY has made it possible for everyone to tackle almost everything, including the world of debt negotiation.
But even if you watch a how-to video on negotiating debt settlement offers with your creditors, should you take the chance and settle your debts on your own? That’s the question we’re here to answer today! Read on to discover if DIY debt settlement is right for you.
What’s the Difference Between DIY Debt Settlement and Debt Settlement Companies?
When it comes to debt settlement, you have two options: DIY or working with a debt relief company. When you work with a debt relief company, you allow the organization to negotiate with your creditors on your behalf. Rather than paying your lender, you pay the debt settlement company a set amount per month. These funds go into an FDIC-insured savings account under your control that is used to pay your creditors back. After reaching successful settlements with your creditors (for lower than the amount you owed initially), the company then pays your debts in full and receives a fee in exchange for their services.
DIY debt settlement cuts out the intermediary. You become your own advocate and negotiate directly with your creditors. In essence, you become a one-person debt settlement company.
The Pros
You May Be Able to Negotiate What Appears on Your Credit Report
Working directly with a creditor may give you a bit less leverage when negotiating a low settlement amount but more control on how your debt appears on your credit report. While negotiating in multiple rounds may get you a better settlement deal, your lender will be more likely to report your debt to the credit bureaus as “settled” instead of “paid in full.”
While this doesn’t sound terrible, having a debt listed as “settled” can adversely affect your credit score. If you take the first settlement offer you receive, your chances are higher that your creditor will also agree to report the debt as “paid in full,” which allows your score to rebound a bit faster and take less of a hit.
Puts the Power in Your Hands
By opting for DIY settlement, all of the power is in your hands. Instead of handing off the reins to someone else as you do when you work with a debt settlement company, you’re involved intimately in every step of the process—every phone call, email, and negotiation—you have full control. While collaborating with a debt resolution organization doesn’t mean losing all power, it does mean dealing less with the little things and more with the big picture.
Faster Debt Repayment
Debt settlement, regardless of how you choose to pursue it, will get you out of debt faster. However, while debt settlement agreements achieved through a company can be closed out within two to four years, you might be able to settle debts on your own within six months to a year. Because you cut out the intermediary, DIY can take less time, especially if you have the funds on hand to make lump-sum payments. However, choosing this option doesn’t guarantee you the best settlement, just the (potentially) fastest.
The Cons
Lack of Experience
Chances are you don’t specialize in finance, let alone debt settlement. If you’re looking to get the best settlement solution possible, it’s probably a good idea to hire an expert. If you want the peace of mind that comes with knowing that your finances are in excellent, experienced hands, having a trusted settlement partner on your side can make a big difference.
The debt specialists who work at debt relief companies like ACCS have years of experience in not only negotiating with creditors, but also tailoring debt solutions that address each client’s unique financial needs. They know a lot because they’ve seen a lot, and will use this knowledge to make sure you get the best settlement possible.
Creditors Won’t Stop Calling
If you’re in debt, you know the feeling all too well: your phone rings, and immediately a sense of dread washes over you. Could it be a creditor calling again, harassing you for payments you can’t handle due to financial hardship?
When you work with a debt settlement company, they become the point of contact for your creditors. They take over all communication for you and get to work negotiating. Instead of harassing you, your lenders will be working with your organization of choice to get you out of debt.
If you choose DIY debt settlement, however, you remain responsible for communicating with your creditors. This means that the constant barrage of phone calls, letters, and emails won’t stop—and neither will your stress.
You Have a Hectic Schedule
In a perfect world, you’d have all the time you needed to devote to settling your debt. But between jobs, school, family, and other potential obligations; chances are you’re low on time for yourself—let alone time to negotiate with creditors. And if you have multiple debts you need settled, the burden of DIY settlement increases.
When you work with a debt relief company, you know that their sole focus and responsibility is on settling your debt. They have all the time and energy in their day to work with your creditors, which results in a better outcome for you.
Debt settlement can be tricky—but not impossible—to handle yourself. If you choose the DIY route, be patient, advocate for yourself, and stay the course. However, if after learning the pros and cons of DIY settlement, you would prefer to enlist the help of an experienced partner, consider American Credit Card Solutions (ACCS).
At ACCS, our highly-rated debt relief program is focused on getting you out of debt faster and for less than owed. When you work with us, you won’t have to DIY, because we’ll be DIT: doing it together. Request a Custom Debt Relief Plan today to explore your options at no cost or obligation.