Trying to Decide How to, or Who Should, Solve Your Debt
Your unsecured debts, whether they be credit, personal loan, medical or otherwise, are threatening to become unsustainable. You know you need to take action, but are not sure just what you can do! On the one hand, you’d like a professional to represent you, but are afraid of the costs involved. On the other, you may lack confidence in tackling this by yourself.
How can you clarify for yourself the best way forward?
Are You Considering These Mistakes in Debt Solutions?
Unless you are very knowledgeable about the whole debt industry, there are a lot of potential pitfalls in trying to solve it yourself. Especially when payments have been missed, and debts have been handed over to collection agencies, and unguarded moment on a telephone call could cost you lots of money and legal grief.
For example, There is a statute of limitations on debts. If you have a debt that is a few years old, it may be expired or almost expired. If you tell a collector on the phone anything that indicates acknowledgment of the debt or a willingness to pay, that may reset the statute of limitations.
I am certainly not suggesting defaulting on debts until they expire! It’s unethical, and it’s murder on your credit score.
I am suggesting that the statute of limitations is good leverage for when you are ready to renegotiate the debt or the payment terms. A professional will know how to use this leverage, while someone representing himself may not have that knowledge.
3 Simple Questions to Choose How To Solve Your Debt
Question 1: Do you have professional knowledge and expertise in the area of debt relief?
If you do, and you have the time and energy, then obviously you will be your own best representative. It is different than a physician who will not treat their own family member.
Question 2: Is your debt a straightforward personal loan or credit card debt, and are you still hanging on with minimum payments?
Your situation will probably call for either a consolidation loan or some negotiation with your creditors to reduce the debt or make some other adjustments. If you educate yourself properly, and then contact your creditors, you may find them open to helping. As for a consolidation loan, speaking to a lending officer at a bank or other institution may be all you need.
Question 3: Has your debt been turned over to a collection agency or debt buyer?
These negotiations are trickier. As we mentioned above, there are many traps an inexperienced negotiator might fall into. Unless your answer to question one was yes, these situations are almost always better handled by a professional debt counselor or representative.
My website helps people to get out of debt. We offer a new Debt Auditor and Financial Independence Calculator, a DIY system to get an idea of where things stand and which generates a custom Solutions Report.
You Can Educate Yourself, but Should You?
I believe everyone should educate themselves about such an important part of their life, but things may go terribly wrong if you are the one to implement that education.
First of all, I may be a good runner, but I’m not going to compete against the Olympic gold medal winner. Professional debt collectors do this for a living. They know exactly how to coax lots of money out of people who don’t have it. They know how to set legal traps. They are not bad people, they simply have a job to do. (There was a Flintstones episode where Barney gets a job with a repossession company and has to take away Fred’s TV!)
Even somebody moderately well-versed can be surprised and set off balance in a debt negotiation or collector call. But if we are dealing with a straightforward negotiation with the bank or credit card company, an educated consumer might do just fine by himself.
The Astounding Difference a Professional Can Make
The do-it-yourself attitude is often helpful, but sometimes extremely destructive. When it comes to home repairs and so forth, DIY is great. When it comes to thousands of dollars, not so.
At the core of my professional guidance lies the principle that the best people get the best results. There is a reason people hire lawyers. It not only saves time, it saves cases. You always want to find the right person to do any important job, even if you could learn to do it passably yourself.
A professional debt representative with legal knowledge will almost always more than pay for themselves in the amount of money that they will save you. They will also, in the process, help your credit score, which opens up many opportunities for you in the future.
Some debt representatives take no fees. They earn their pay from a percentage of the debt solution that they negotiate for you. Considering that they will get a much better settlement, you will still come out way ahead than if you had tried it on your own.
Others do charge, but they will be more than a counselor, they will be your debt accounability partner. This is big, since when you pay a modest fee, you will be more committed to seeing through your plan to solve your debt.
So Here Is the Way to Choose Who Will Solve Your Debt Problem
Just ask yourself the three questions:
- Am I an expert on a professional level?
- Is my debt straightforward and current or close to it?
- Has my debt been turned over to a collection agency or buyer?
In all cases a professional representing you is a good idea. In some cases, depending on the answers to questions one and two, you can educate yourself and succeed reasonably well on your own. If 3 is the case, having a professional representative is very important.