How to Settle Your Debts On Your Own

A Step-By-Step Guide to Settle Debts On Your Own

Settle Debt With Credit Card Companies

If you cannot pay the minimum on your debts, it's time for you to settle your debts. Debt settlement is a way by which you can negotiate with creditors/collection agencies to reduce your debt amount by 40-60%. If you enroll in Debtmerica's Debt Resolution Program, professional debt consultants will guide you through the debt settlement process and our skilled negotiators will do their best to secure the lowest possible settlement. However, it is possible to tackle the debt settlement process on your own. This article will give you a step-by-step analysis on how to settle your debts yourself. Also, make sure to review our article "The Pros and Cons of Settling Debt Yourself".

Getting Started

  1. Calculate your total debt amount.

  2. Analyze the type and age of your debt accounts.

  3. Get a copy of your credit report from the credit bureaus and analyze it.

  4. Look through your credit report and find out if your account is still with the creditor or turned over to a collection agency.

How to Settle Debts Held By Original Creditor

  1. Contact your creditors and explain your plan. Tell them how they can benefit from it.

  2. Inform your creditors that you are sending this offer to all other creditors and the ones who accept the offer first will be paid off first.

  3. Keep records of acceptance letters and send in the amounts agreed upon ASAP, requesting a receipt stating "Paid in full".

  4. Repeat this process each month and go on adjusting your debt settlement offers upwards.

  5. When you have fewer debts to pay off, send in offers of paying back higher percentage of the outstanding balance to your creditors.

  6. Repetition of this process each month will make you debt free soon.

  7. Don't forget to obtain a fresh credit report once a year to keep yourself updated on your account status.

  8. After you pay off debts, negotiate with creditors such that they update the account status on your credit report as "Paid in full" or "Paid as agreed".

How to Settle Debts Held By Collection Agency

  1. Contact the collection agency (CA) by letters & not phone as they may behave badly over the phone.

  2. Keep the name and direct phone number of the collection agency representative whom you are talking to.

  3. Send a debt validation letter in order to verify that you owe the money. Accept a reply only when it contains the following:

    • Proof that the CA is assigned to collect the debt by a creditor.
    • Detailed payment history starting with the original creditor.
    • Copy of the original signed debt agreement or credit card application.

  4. If the reply is not satisfactory, inform the CA that they are violating the FDCPA and they need to remove collection listing from your credit report. Otherwise you have the right to sue them.

  5. If the CA validates the debt and it turns out that you owe the money, then you need to contact the creditors. Request them to pull your account back from the collection agencies.

  6. If you have enough money offer lump sum payment to the creditors.

  7. If you don't have enough money, make your creditors aware of your inability to pay off the total debt and offer them an alternative payment plan.

  8. If your creditor doesn't pull back the account from the CA, negotiate with the collection agency with a cool brain.

  9. Avoid sending cash and make the payment in such a way that you get a receipt. Don't forget to mark your envelope as "Payment enclosed".

  10. Don't miss payments and make sure that your check doesn't bounce while paying the collection agency.

  11. Try to clear the debt account in time so that you don't have to deal with the CA again.

In case you aren't comfortable dealing with creditors/CAs, you can get help from our debt settlement professionals who will negotiate on your behalf and help you to settle your debts. Get a no-obligation free debt consultation to assess your financial situation and then decide what to do.


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We offer debt resolution programs that specialize in negotiated debt settlement that assists clients by reducing debt balances while providing an affordable monthly payment.

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