Do it Yourself Debt Negotiation

People everywhere are accumulating more and more debt and there is a greater demand than ever for services like credit counseling and debt management. These companies will negotiate with your creditors on your behalf to get lower interest rates, reduced finance charges and better terms on your accounts so that you can pay them off and get out of debt more quickly.

Before you jump in and sign up with a credit counseling or debt management service, consider negotiating with your creditors yourself.

There are several distinct advantages to negotiating your debts yourself. The greatest advantage of doing your own debt negotiation is that you can protect your credit rating. While services like credit counseling and debt management companies will negotiate how much you pay each month, they do not negotiate how the item will be reported on your credit report. That means that the creditor can continue to report the account as delinquent even after you start making your agreed-upon payments.

Most people are behind on their payments when they go to a credit counseling service. The counseling service contacts your creditors, negotiates a lower payment for you, and then you start making that payment right away. However, the amount that was past-due at the time that the credit counseling service negotiated for you is still past due, and a creditor can continue to report it that way on your credit report even if you are making your payments as agreed.

Additionally, many creditors will report that your account is being handled by a debt management company which can leave a negative impression on your credit report. Accounts handled by credit counseling services are often reported as "paid less than owed" or "account closed by credit grantor" which can both hurt your credit score.

The biggest advantage to negotiating a payment plan with your creditors on your own is that you can also negotiate how the account will be reported on your credit report. That means that you won't just be getting yourself a better interest rate on the account, but you will also be protecting your credit for the future.