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Question: Is it better to call debtors yourself or hire a debt consolidation company?

(Posted by: BreannaDrew on 2010-05-18 14:07:30)

I have outstanding debts with about 40 different companies, some are creditors, some are loans, and some are medical bills (its been a financially bad few years). I'd really like to get a plan made for paying these things back but some of the fees are just ridicules (like 35 % interest). I know that if I go to a debt consolidation company they'll just call each one and negotiate terms, and have had it suggested to me that I do this myself to keep from incurring fees from a consolidation company. However, I would like to know from professional or personal experience if others recommend just making the calls myself or if a debt consolidation firm will be able to negotiate better than I can - to the point of making the extra fees worth it.

Posted by: STEVEN F on 2010-05-18, 14:48:48

MOST 'debt CONsolidation' companies WON'T call anyone. They will take your money and WAIT until the creditors call. Then they will try to negotiate a settlement for a fraction of what you have paid them. YOU can settle your debts for LESS by contacting individual creditors ONE AT TIME. Save up about half of what you owed one creditor BEFORE the excess interest and late fees. Then call that creditor and offer what you have as FULL settlement of that account. DO NOT negotiate. Inform them that if they provide a WRITTEN agreement to settle for that amount, you will overnight a cashier's check. If they don't accept, you will talk to someone else. Whatever they say is irrelevant. Their job is intimidation.

Posted by: nosy on 2010-05-18, 14:59:39

Well you may want to give it a go yourself first to save yourself any further debt. 1. Write out a brief explanation of what or why you are where your at. Generic letter so you can later just put all the different creditors on it. 2. List out all your debts total and the min. payments they currently have or total past due. 3. Make a detailed budget - generic. You will need to include this with your letter to them as well. 4. what can you pay in total per month & when. If 1/ 2 is paid on the 15th and the other on the 30th. break it out so they can see where they are to be paid. 5. Ask - set out with a min budget and a reduced interest rate and that you want them to "reage " your account. this is important because you want the credit bureaus to see that you have started over again - this will help your scores! 6. Do all of that and then include your first payment to them as well. This will send the message of - I am now organized, ready to start clean, please help. 7. Be patience and always talk to them - keep them in the loop one way or the other. Ask for their help - but don't be quick to agree to their terms - they will always ask for more than you can.