Reading the following information will help you avoid common pitfalls and guide you in the best direction. Find out if debt settlement (DS) is even your best alternative in "What's Your Best Option?"

Do's

Check Your Receipts. Have You Paid This Debt Before?

They do it incidentally and yes, sometimes even intentionally: creditors and collection agencies continue to ask for a debt that has already been satisfied. Commonly, a debtor will pay the collection agency who is collecting the debt, but afterward, the collection agency will sell the debt to a different collection agency who will ask for payment. Other times, a creditor will assign a collection agency to collect their money; a debtor will make the full payment to the creditor but the collection agency will still ask for payment. Save all your receipts and satisfactions and compare them to any new debts. If a company is in error, prove that you no longer owe them any money.

Arm Yourself With Knowledge

Debt settlement (DS) is a process that you can learn. You may feel intimidated with the whole concept but by reading through our information you will know what to say before you handle any negotiations. Becoming a savvy consumer will empower you, give you confidence, and help you take control of your debt.

Play Offense and Be a Proactive Negotiator

Attitude counts! Like any sport or other competitive venue, attitude has a direct bearing on the outcome of a negotiation. Expect to win.

If your lender requires that all your collections are settled, you will have to initiate and control any negotiations with the debt collector. Maintain your ground and make sure you determine the date and price you can payback the debt. Let them know that you are willing to work with them and that you want to pay them back. Don’t play defense; play offense. Remember, knowledge is power and confidence.

Save as Much Money as Possible

As soon as possible, you'll need to formulate a plan for accruing cash over time and setting it aside in a savings account. Because you may be strapped for cash, this may seem difficult. However, you may need to liquidate funds, save up as much as you can over a few months, or change spending habits.

Start Negotiations at the End of the Month

If an account is in collections the collections department or collections agency will be more inclined to negotiate as they are trying to close out their books for the month. Most representatives have monthly quotas to meet or bonuses to win.

Get Everything in Writing

You only have a settlement agreement when you have it in writing. Make sure you have an agreement that is binding on the company that owns the debt. Then make your payment.

If You Can, Tape the Call

Flicking on a tape recorder is a great way to keep a debt collector in line. Plus, you get a record of the call. Thirty-five states and the District of Columbia allow you to secretly tape your phone conversations. In the other 15 states, you can tape with the other party's permission. And if you tell the debt collector you are going to tape and he or she keeps talking, that's considered giving permission.

Record Everything

File all collection letters and keep detailed notes of collection calls. Note the day and time of each call, the name of the collection agency, the first and last name of the caller and what was said.

Always send letters via certified mail return receipt requested. This proves that you sent the document. When the creditor or collection agency receives the letter, they must sign for it and the post office will send you a green card saying when they received it. This will cost you a few dollars but it's well worth the expense.

Always use a check or money order when making payments and send it via certified mail return receipt requested. It is very important that you are always able to prove that you have paid them. Keep all of this information together in your folder for future reference.

Keep Some Accounts in Good Standing

If possible, you should keep paying on at least one or two credit cards, making sure they are in good standing for future usability. The credit cards you want to pay/keep in good standing are usually the ones with the lowest current balance owed and the highest limit.

Don'ts

Don't Hire a Debt Settlement Company

Once you have read and understood the woes in using a debt settlement (DS) company, you should feel more confident and determined to settle your own debts. Not only will you save more money, but you will also save time and get out of debt much faster. If you believe a DS company is your best option, you need to read, "Hiring a Debt Settlement Company - The Fees" and "Hiring a Debt Settlement Company - The Risks."

Don't Ignore Your Creditors

Most consumers are unsure or unaware of how to address delinquent debt and its compounding problems.  Unfortunately, this just leads to more stress, more procrastination and eventually, a state of denial.  Usually, they end up ignoring the problem, hoping it will go away.

Not paying your debts at all can result in serious consequences. Ultimately, the creditor (or an assignee such as a collection agency) can, and probably will, sue you, take you to court, win a judgment, and garnish your wages.

Don't Tell Them Your Life Story.

You probably don't want to tell a lengthy explanation of why you can't pay because in reality, creditors, and especially collection agencies, don't have a lot of sympathy. This is what they do for their job. They hear down-on-your-luck stories day in and day out.

Don't give a debt collector personal information such as where you work, where you bank or your checking account number. Essentially, say as little as possible and no matter what a debt collector says, keep your cool and stay focused on the negotiation. The more in control you sound and the less you fall apart, the more likely you are to get what you want out of the negotiation.

Don't Be Rushed

A debt collector will push and push for you to send them money immediately. Don't do anything until you have confirmation of a payment agreement in writing. Because you need it in writing, you have to resist all those demands and quick offers to do it overnight. If you come to a negotiation over the phone, type up and send a letter to the debt collector outlining the payment agreement. You'll want to send this letter via certified mail so you'll receive a receipt once the letter is delivered. Have them sign it and send it back. Once they do, keep a copy for your records. If you plan to pay by check, write the following disclaimer on the check: "Cashing this check constitutes payment in full."

Disclaimer: The information provided in this site is not legal advice. All information is general information, some of which pertains to legal issues involved in the subject matter. Credit Matters Inc. is not a law firm and is not a substitute for an attorney or law firm. Your access to and use of this site is subject to additional terms and conditions.

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