While debt settlement may be something best handled by an attorney or some other kind of debt settlement service, there are ways you can handle this yourself. A key thing to remember is that your creditors will always prefer to get paid something, rather than not get paid at all.
The act of settling your debt alone is quite contradictory to the normal way credit is looked at and the way payments are made. Normally, the better credit you have, the less likely a creditor will be to accept a settlement on a debt. The fact that the further you are behind in your payments and the worse your credit rating may be makes a lender more receptive to accepting a settlement makes this an idea that many people find unfathomable. However, the more delinquent you are in your payments, the more likely your creditors will accept a debt settlement.
The first thing you need to figure out is how much you can afford to pay to any creditors you may have to get rid of that debt. While there are some instances where a creditor may make a settlement that involves more than one payment, the majority of the time you will be settling a debt by means of a lump sum payment. Once you come up with a pre-determined amount that you believe to be an amount that you will be able to pay them, you should call the creditor to see if they will accept your settlement.
Most of the time, creditors will accept settlements on accounts which they have already charged off and taken as a loss. Since they have already taken a loss on their books and have already assumed that they will not be collecting any future payments on that account, they will likely be willing to make a settlement with you. Depending on the creditor and the amount that was charged off, most lenders will accept 50 cents on a dollar to settle the account. Others may accept 30 cents on a dollar or even less. Always start with a low-ball offer and move up from there if your initial settlement amount is not accepted.
Remember that when you do end up negotiating an acceptable debt settlement with a creditor, get something in writing stating that the obligation has been settled and paid in full according to your agreement. This will protect you from any future claims as well as provide proof for any credit reporting agency that the account should be reported as settled, and not charged off, which in turn will be better for your credit rating.
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