Many industry experts are split on debt settlement methods as well as if the consumer is truly equipped to handle the work themselves. Debt settlement used to be something we rarely saw five years ago when it came to original creditors. Without the help of a settlement expert who was smack dab in the midst of the credit industry, consumers were often left overwhelmed and under-prepared.

Original creditors were usually quite stubborn on working out any sort of discount settlement despite the fact that they could recover at least half of a potential bad debt. It didnt matter, and as counter intuitive as it seemed, it was just the way it was. It seemed the creditor’s thought process and narrow view of people’s hardships were still very much out of touch. Assigning the debt to a collection agency and paying them a large portion seemed a better choice.

Fast forward to 2010-2011 and creditors have seemed to grasp the idea of settling potential bad debts. Now, when a consumer defaults, the creditors are pretty quick to send out settlement letters themselves rather than charging off the debt to a third party debt collector. Their response time will still vary with most not offering up a settlement while payments are still coming in, but should the debtor go 90 days or more without making a payment, and the offers suddenly begin appearing in your mailbox. Perhaps the industry is finally starting to understand what we’ve all know for the past 5 years – that people are truly in dire straights.

People who try to continue to make good faith payments dont usually get these settlement offers which makes little sense. Even when a debtor is clearly trying to pay the most that they can afford and showing signs of further delinquency, the offers still dont come. The problem with this is that the late fees and increased interest rates for default just keep piling up. This action makes any good faith payments do little to nothing for your balance. Clearly, these offers should come before the account gets to this stage – perhaps by intercepting the accounts at the first signs of delinquency and offering a new payment plan similar to what a credit counseling agency could do. The creditors have a lot to learn. Sadly.

Hiring a professional debt negotiator can be a wise investment but you need to be extremely cautious of who you retain. There are hundreds of businesses who claim to be experts but many seem to suck even more money out of an already financially strapped consumer. By settling the debts yourself, you can save those fees to go towards your debt.  DIY debt settlement isn’t for everyone but it can be very effective.

To learn more about DIY debt settlement techniques that you can accomplish without paying an expert, be sure to check out Zipdebt and his blog. Charles Phelan, the creator of Zipdebt, is one of the industry’s best experts on the subject and offers coaching for consumers.