by average_joe » Sat Jan 10, 2009 09:40:43 AM
I agree if you can avoid bankruptcy do so. I avoided bankruptcy and took settlement route. If you’re going to take the settlement route don’t do debt consolidation, I find this to be costly and it makes your items on your credit file stay on there a lot longer. If you have the ability to raise money I would approach the creditors and try and do a one time lump sum payment. This method could save you thousands of dollars. Before you start to settle your debts make sure your debts in your credit file are showing R9 or the creditors will not take you serious. If you’re not working and have no assets or proof of a medical letter, I would start at a low percentage of 10%.
If you’re going to take the settlement route I mention I would ask the collection agency or creditor that you want to fill out the financial capacity forms so you could be considered for a low perimeter settlement offer. These forms are to tell the creditor your financial situation, and if your not working or etc like I mention up top this could help you get a low settlement. If they don’t have the forms type a letter stating your situation. If you’re not working due to a medical reason get a letter from your doctor or a notarized letter from a lawyer.
If you’re not happy with the settlement offer the collection agency gave you, don’t accept it and contact the creditor. If you’re going to send documents to the collection agency and they tell you they are going forward those to the creditor call the creditor to make sure they received them. The collection agencies do not want to settle debts for a low amount so it’s in their best interest to discourage you. The longer the debt is in a collection agency the better chance you have of getting a low settlement if you know what you’re doing. If your settlement is accepted make sure you get a letter faxed to you before you hand over the money. If you hand over the money without a letter, then your money will be applied as a payment and if this happens you will call them and they will tell you the person that was working your matter are no longer there.
One final note, if you’re not happy with the collection agency, you have the right to settle your matter with the creditor. People think once the debt is a collection agency that the creditor doesn’t want anything to do with you any more, this is not true unless your debt was sold.