Yes, you can negotiate your own debt settlement. First of all, the creditor is going to be represented by an attorney. Typically what happens is that the attorneys are going to welcome a call from a debtor who wants to resolve their debt. The disadvantage that you’re at if you’re representing yourself is that you don’t have a sense for what can be done and you are somewhat reliant on the creditor’s attorney to help you determine what they’re willing to do. I’ll give you an example and this is an exaggerated example in the sense that this was a true experience but usually in my experience, most creditors aren’t this eager to take advantage of someone. Years ago, I was in my office on a Friday and my assistant said that she was getting a call from a frantic person and I needed to get on the phone with her. The situation for this lady was that her husband had been injured and had been out of work for about six months. He had a very good job that was being held for his return, which however required a security clearance. They were very concerned about his credit rating and his credit standing. A creditor had gotten her on the phone regarding a delinquent debt and was insisting on a Friday afternoon that she come up with approximately $2,000, more than half of the total debt that was owed. The creditor’s attorney office was located locally and they were insisting that she acquire that money and drive it to their office that day. She was in a panic and was intending to do that. She went to the bank and got every scrap of cash that she had available to her in their bank account and was prepared to get in her car and drive it to this attorney’s office. I don’t believe it was an attorney who was talking to her. It was some administrator that worked in that office. She called to report how much money that she had and that she was prepared to deliver it that day. This person working for the creditor insisted that she’d have to deliver a $100 more. It’s what led her to call my office. When I talked to her, I knew that she was being misled and that the debt could be resolved on much more favorable terms. I’d had experience with this law firm and I’d had experience with this creditor. I knew what was acceptable to them in general and what they would be willing to do.
I dissuaded her from driving over to that office that day with the money and scheduled an appointment for her to come in and see me the next available business day. She came in to see me. While I was in the office, I picked up the phone and I called an attorney that I knew at that firm and we worked out a monthly payment plan for her that she and her husband could afford. Here’s the point of the story. Most of the people that I talk to are not abused in the sense that she was being abused, but they don’t know what a creditor would consider reasonable as a proposal to resolve these cases. When you have somebody who has done this hundreds of times, they’re in a better position than you are to know what a creditor’s attorney is going to find reasonable. They can make an analysis of whether or not what you can reasonably afford to pay and manage with your other obligations, whether it is going to work or not before you spend your money and what can be done. There are also different ways that these cases can be resolved that are to the debtor’s benefit rather than a judgment of dismissal on certain terms and conditions.
While you can attempt to settle a debt yourself and if you have a relatively smaller debt then that might be the way to go. While you can attempt to settle these debts on your own, most of the time, a creditor’s attorney is going to be eager to do that because they’re happy to work with people who are willing to volunteer payments. You may wind up paying more than you would otherwise have to pay or in a greater monthly amount than you would have to offer to get the case resolved. If you’ve got somebody doing it for you who has done hundreds of these things, you are going to have a store of experience that you’re able to draw upon to let you know whether or not what you’re proposing or willing to propose is likely to be found acceptable.
I’ve had a number of people come into the office and they’ll sit down and I will go over there financial obligations with them. Once I’ve done that and let’s say I might be looking at a certain thousand dollars credit card debt, I’ll get my calculator out and figure out what I think it would take to resolve that debt based on my experience. I will say to the client who is sitting across the desk, “Can you handle $250 a month to get this resolved for the certain number of months”. Frequently, they’ll say to me, “No, that won’t work”. I will ask, “What makes you think that?” and they’ll say, “I’ve already offered that and they’ve turned it down”. They are probably talking to someone in that attorney’s office who is not the attorney, who is paid to answer the phone and engage in collection negotiations. That person may be relating to them what they’re authorized to do but what they’re authorized to do is not necessarily going to be what the bottom-line on what that creditor and that attorney are ultimately willing to accept.
Once in a while a client will come in and they’ll be represented by an attorney that we haven’t dealt with before. Usually most of the major commercial creditors are using the same firms over and over again. There are also going to be people that we’ve had experience with and will have some idea of what they’re willing to accept based on experience, what they’ve accepted over the years, what they’ve accepted recently and have some context to put that into it in discussing with the client what might or might not be a reasonable settlement.
We don’t necessarily begin these cases with the notion that they’re going to be settled. That’s up to the client. If the debtor acknowledges that the debt is owed and is interested in a working at a payment plan, that’s fine. We may have people come in that are cosigners or that have had identity theft or unauthorized use of their cards and they could have defenses. You should take a look at all of these things before you ultimately make a decision to settle because there are ways of defending these cases as well. Certainly, most people come in with the notion that they want to try to work out some kind of a reasonable payment plan and that usually is the best way to approach the case but we don’t meet with the clients initially with that as a precondition in mind. We want to look at all of the circumstances and hope that debtor makes the best decision for them.