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Path Three - Negotiate Lump-Sum Settlements

Debt Negotiation Debt Settlement

This is generally a path for folks who are in up to their chest. If you can't see how you'll ever pay off the whole bill, but you don't want to or can't go bankrupt, read the following very carefully. This is a very effective way to get rid of your debts, but it's a very serious step to take. Debt negotiation, also known as debt settlement, is a process that you could do on your own, but there are some reasons to consider having professional help.

First, it's not a pleasant process and secondly, when you use a professional organization to negotiate for you, they not only have working relationships developed with the other side but they handle large numbers of accounts, in effect giving them volume discounts. They will also be on top of the industry trends and know if any creditors are in need of cash and are offering specials. As strange as it may sound, with the debt collection industry there will, on occasion, be sales, as in, "We normally settle for 45 cents on the dollar but for the next two weeks we'll accept 32 cents". I know it sounds weird, but it does happen. You won't know about it, but your negotiator probably will.

How It Works
Simply put, debt negotiation works because you quit paying your bills. Please let me explain. You will quit paying your bills to your creditors and start saving what you were paying to them. Your negotiation company will want you to have a special account set up just for this purpose. When enough money is saved up your negotiator will contact your creditor and settle the account. This process is pretty simple. But wait! There's a lot more you need to know before you go down this path.

Why It Works
This strategy works because after your creditors go unpaid for a substantial period of time they think you've skipped out on them. When the negotiator calls with a cash offer, they understand they won't have to go looking for you, and with the idea that something is better than nothing, they'll take the offer.

Oh But It's Not Quite That Easy Debt Negotiation Debt Settlement It may come as no surprise to you, but your creditors will not be at all happy when you stop paying your bills. You may become familiar with the sound of you collectors voice, stacks of mail, and terms like; collection agency, lawsuit, summons, judgment, wage garnishment, lien, attachment and more "fun" legal terms. I'm going to tell you this again, but pay attention this time, too. If you're going to drop out of the program when things get tough; don’t even start just move on to another path right now.

For this plan to work you have to be determined; because it may take over three years and you can't give in to the easy way out. Here's what I mean. Simply telling your creditors that you plan not to pay them for two years while you regularly put money into an account with a company that will settle you account for pennies on the dollar isn't going to work.

You have to tell them nothing! And they're going to be...not happy. As a matter of fact they're going to use every legal means that they have to collect the bill and collect it now. Unfortunately the measures taken against you may not end with the legal ones. I hope you're sitting down because on occasion bill collectors have been know to go beyond their legal rights to collect their money.

The Debt Collection Process
Debt Negotiation Debt Settlement For your debt negotiation strategy to work, you're going to have to be very familiar with the debt collection process and have strategies in place when offensive tactics are used against you. Read through my Debt Collection Process section. It's best to be prepared in advance for creditor calls, late fees, over-the-limit charges, collection letters, collection agency phone calls (not pleasant), letters from lawyers, summonses, lawsuits and judgments. None of these will stop your negotiator

from settling your bills when there's money available. Many or all of these things may happen to you when you're in a debt negotiation program.

If you are going to want to drop out of the program when you get a nasty phone call from a collection agency, find a different path.

Your Debt Negotiation Company
Debt Negotiation Debt Settlement Your debt negotiation company should help you with strategies that assist in dealing with collection issues. Allow them to help you, but it's going to be up to you to make the process work. Your debt negotiation company won't hang up the phone for you if you get a nasty call; you've got to do it yourself. They won't lend you money to pay your bills; you've got to be able to make regular payments into your settlement account. But if you work together as a team you will be successful.

Debt Negotiation Debt Settlement will effect the credit report! Now, if you're ready to live a debt-free and prosperous life you may not be worried about this at all. If you want to get your credit report repaired read through our Credit Report section.

One of the worst mistakes you can make! You're going to have to pay an administrative fee to get into a negotiation program. You're going to get nasty calls from your creditors. So if you don't have what it takes to make it through this process don't start! You won't get your fees back and your bills will have gone unpaid and quitting won't help the situation. You'll simply be in a much worse position than when you started, and you weren't in that good of a position when you did start.

Do-it-Yourself Debt Negotiations
I used to be somewhat reluctant to recommend the do-it-yourself approach to debt negotiation, mainly because there were no good coaching programs or training courses available for consumers to learn how to successfully negotiate creditor settlements. As with any profession, there are skills involved, as well as knowledge, training, and some inside information on the "tricks of the trade."

Fortunately, now there is an excellent solution for the hands-on person who wants to tackle the job themselves and save big money off their debts. For the do-it-yourself approach, I highly recommend Charles Phelan's Debt Elimination Success Seminar. Written by a former executive from one of the nation's largest debt settlement companies, this comprehensive seminar includes 5 audio CDs, forms & letters on CD-ROM, a Workbook, and several free bonuses, including a free personal telephone consultation with the author. The course covers everything you need to know to settle your own debts.

In addition - and this is what really sets this seminar product apart from the competition - the course comes with 12 months of unlimited personal coaching via email. By following the materials in this course and taking advantage of the great follow-up support and coaching, you could potentially save 50-100 times the cost of the seminar. If you're leaning toward the do-it-yourself approach to debt settlement, then it only makes sense to educate yourself and get some help. With the Debt Elimination Success Seminar, you'll save a ton of money on negotiation and administrative fees, yet you'll still have help and advice along the way.

Debt Negotiation Can Be A Very Effective Path. Make Sure You Understand It Before You Go Down It.

The Ultimate Solution
No matter which path you take the ultimate solution to debt is found by taking control of your life, and your money. Just figuring out where the money goes isn't enough. You must have internal control over your emotions, thoughts, and actions. By doing this you will gain the ultimate control that will allow you to build the life of your dreams.

The ultimate solution to debt lies in creating and living a debt-free and prosperous life. I invite you to start you inner journey to wealth by reading The Art of Prosperity.


"Thank you for your help and resources. I had no idea how to handle my creditors until I found your website. Yes, there is light at the end of the tunnel!

(2nd Grade School Teacher, Washington)

"I appreciate your helpful information. We were able to work out a deal that is a win win situation for me and my debt collector's. Thank you so much.
Julie T.
(Receptionist, Texas)


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Debt Calculator

See how long it will take for your debt to get paid off with one of these four options. We have listed a standard debt amount as a default on the debt calculator. You will need to enter your current personal or business debt amount below to see what your debt payoff amounts will reflect.

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Total Unsecured Debt $30,000.00 $30,000.00 $30,000.00 $30,000.00
Months To
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Interest Rate 18.9 % 12 % 10-12% Ave None
Total Interest Paid $49,978.53 $10,040.01 $21,300.00 None
$900.00 $667.33 $855.00 $458.33
Total Cost
To Be Debt Free
$79,978.53 $40,040.01 $51,300.00 $16,500.00
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PLEASE NOTE: This calculator gives you an estimate of how much it will cost you to get out of debt, how long it will take and how much your monthly payment may be with the different options to pay off your debt. Keep in mind "Minimum Payments" assumes you NEVER make any further purchases on your credit cards and the credit card companies NEVER raise the interest rate on your cards in the future from the rate calculated above. The "Debt Consolidation Loan" example is usually only possible when taking out an "equity line of credit" or "second mortgage", which involves securing your unsecured debt with your home. This is a very risky option for most people because the home could be foreclosed if you cannot make the payments.