How to Settle Your Debt with Collection Agencies for Pennies on the Dollar

Make up your mind to act decidedly and take the consequences. No good is ever done in this world by hesitation."

- Thomas H. Huxley

I have heard some bad things about debt settlement, also known as debt negotiation. The problem as I see it comes from misinformation and half truths from those that complain about it the most, usually a consumer credit counseling company.

A debt settlement company's competition.

Truth be told, the CCC does near equivalent damage to a person's credit file as a bankruptcy, as attested by countless consumers that I as debt settlement clients. It is humorously called "bankruptcy's brother" in the financial service industry.

Now, let's get something straight; any form of debt relief does damage to your credit file, including debt settlement. The degree of damage is different based on the type of relief program. The possibility exists that a creditor will take you to court but it is highly unlikely. The cost of money and time is not considered worth it. There are other things a creditor can do to recoup their losses by using tax write off's and selling the debt to a collection agency for anywhere between 8 and 12 cents on the dollar.

A debt negotiation company will use this knowledge in settling your debt.

In debt settlement there are two different approaches to negotiating consumer debt. This article will focus on debt already in collection. Your first step would be to check the age of the debt. Check the statute of limitations. Collection agencies have a window of time to take any action against you, normally 7 years; however the collector has deceptive tactics that it uses to extend this time. However, any excessive age on a person's debt is, at times, considered in creditor determination.

Prioritize the debt that you have and determine who should be paid off first. Some factors to consider are who your creditors are, how aggressive they are becoming and the amount of debt owed. However, remember that time is on your side. As the debt nears expiration the settlement offers will get better.