Do It Yourself Debt Settlement 

By the time an account gets sent to collection, the costs of administering it have increased greatly. The time and money involved in seeking payment quickly adds up and can almost make it not worth it to a creditor because they have the option of just writing it off. If a creditor has all but given up on you, it might be time to try to negotiate a deal with a do it yourself debt settlement.

Collection agencies are usually paid on a percentage of what is collected, so while they want to maximize their return, they are often more than happy to settle on whatever you're willing to pay. Their primary objective is to get you to pay as much as possible as fast as possible to get the matter over with. For this reason, they are much more flexible when negotiating a lump sum payment, rather than drawn out installments.

When negotiating, always offer less than you owe initially, in the range of 40% is usually a good starting point. The collection agency will always try to get you to pay more, once you've expressed a willingness to settle, so starting lower will help you get to a happy medium. Prior to payment you have bargaining strength, so at this time also negotiate for the debt to be removed from your credit report, possibly in exchange for a slightly higher payoff amount.

Whatever you do, don't offer to pay any more than what you can actually afford, either in a lump sum or an installment plan. No sense perpetuating further financial problems. And keep the source of the funds to yourself. If the collection agency thinks you have a friend or relative that is willing to help you out they will use that to try to get more money from you.

Get your final agreement in writing, along with a confirmation letter that the settlement satisfies your entire debt and that the debt will be stricken from your credit report. Make payment either by cashier's check or money order directly to the collection agency, unless instructed otherwise in writing. Get a signed receipt if you make cash payment, and keep all documentation for at least four years.

Collection agencies have strong motivation to get your money and get it quick. This gives you some useful leverage when negotiating a debt settlement. Making use of your bargaining power can enable you to negotiate a better settlement and start you on the road to cleaning up your credit report.