With do-it-yourself debt settlement, you negotiate directly with your creditors in an effort to settle your debt for less than you originally owed.
The strategy works best for debts that are already delinquent. Creditors, seeing missed payments stacking up, may be open to a settlement because partial payment is better than no payment at all.Debt settlement is an option if your payments are at least 90 days late, but it’s more feasible when you're five or more months behind. But because you must continue to miss payments while negotiating, damage to your credit stacks up, and there is no guarantee that you’ll end up with a deal.
There are better ways to handle your debt than DIY debt settlement. If you decide to proceed, handling debt settlement negotiations yourself may be a better option than using a debt settlement company, which can be expensive and ineffective.
Here’s how DIY debt settlement compares to using a debt settlement company, and how to negotiate with a creditor on your own.