Thanks for coming to learn about Do It Yourself Debt Settlement! We're here to help you create your own Debt Settlement Plan, save the cost of Debt Settlement Companies AND identify the personal barriers that have made your do it yourself debt settlement plans a failure in the past!
Debt Settlement Companies
Debt Settlement Companies are all the rage... except you might not recognize that. Right now, it seems every company with any claim (however preposterous) to helping you negotiate debt with the IRS (or state agencies) is advertising right now to get clients. They have no "Maximum" but they do have a "minimum" indebtedness they wish to represent because, after all, they work on percentages. If they save you lots of money, they want a piece of it!
Just how much? Good question, it pays to ask the debt settlement companies that question up front and to inquire of your state what laws or regulations pertain to how debt settlement companies operate and the fees they may charge.
These commercials though about lowering tax liabilities do raise a good point though... that all debts at some stage of delinquency are negotiable, even tax debts. The debt settlement companies representing people before the IRS act as if they have insider knowledge, and perhaps they do, but these days, all you have to do with the IRS is mention "Timothy Geithner" the tax dodging Treasury Secretary who runs the agency of which the IRS is a part and every one knows there's no such thing as a non-negotiable debt. If debts couldn't be paid later or at a reduced rate, why is Geithner not in jail?
My point is that while insider knowledge of a field may be stressed by debt settlement companies seeking your business, it's free to try to create a debt settlement plan on your own! What have you got to lose? Nothing. You have, in fact, much to gain.
So remember this point, debt settlement companies exist (and you can have a do it yourself debt settlement plan) because Just as price is negotiable on the front end of a sale, debt repayment is negotiable on the back end of a sale!
So what kind of debt settlement companies are there? Here's an overview...
- Tax settlement companies are simply a specialized version of a debt settlement company.
- "Non Profit Credit Counselors" are really a kind of debt settlement company because they negotiate lower payments for customers according to pre-approved debt settlement terms offered to them by the credit card companies. The credit card companies, effectively, pay them a percentage handling fee for taking care of this for them without having to hire lawyers or collect it themselves. States usually allow them to collect a monthly fee from the customer as well. This is regulated by state law.
- Some debt settlement companies are run by individuals with no special credentials except their self-proclaimed expertise in negotiating down debt. They charge a percentage (%) of the money saved that would otherwise have been paid.
- Some firms claim they are debt settlement specialists because they are lawyer run debt settlement companies. What gives a legal firm especial aptitude in the area of debt settlement is anyone's guess because most lawyers certainly know nothing of lowering their own fees! But in theory their knowledge of contract law offers some expertise - if only to say "well our local bankruptcy judge would only let you collect 'X dollars' but if you do it this way, I can make sure you get 'Y' amount of money." Presumably these attorneys operate on a percentage, but it pays to ask.
- Mediators are legal professionals who try to resolve things amicably, so retaining one to do your debt settlement plan won't send cold chills down your creditor's spine like sicking a lawyer on them might. The mediators working as debt settlement companies of my acquaintance operate as "neutral third parties" aiming to help each side come to a reasonable settlement. In such cases, these people operate on an hourly or set fee because to charge a percentage on savings would mean the mediator would have a vested interest working for the debtor. That's hardly neutral! So when legal mediators operate as debt settlement companies, they are paid whether the debtor saves any money or not.
- Abritrators may function as debt settlement companies when you have entered into a contract that states you won't go to court. The company you're contracted with may try to make it seem this is binding. But it may not be. Even arbitrators can't get blood out of a turnip or go around bankruptcy court. And, they still function under the law that debts to be paid are negotiable!
Bottom line: There are a variety of people who offer themselves to you as debt settlement companies. They all charge an hourly or a percentage fee - perhaps both.
It often will not hurt your situation to attempt a do it yourself debt settlement plan with a creditor. Nobody knows better than you what you can pay and when. They may choose to take "something" rather than nothing. But if that fails and you're fairly sure you can get a better deal using one of these types of debt settlement companies, then you are free to explore that option as well.
Disclaimer: Remember, this information is believed to be correct. Not being attorneys, we recommend you talk to your personal financial advisors on how to apply general principles to your own personal situation.
