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Types of Debts to Settle

Not all types of debts can be settled. Secured, collateralized debts such as a home or automobile usually cannot. Since creditors can simply repossess the property on which you've defaulted, there's no convincing reason for them to negotiate. You might be able to renegotiate a short payment relief for a secured debt, but don't expect to settle the account while you are still in possession of the property.

Seizing Control: Gaining the Upper-HandSeizing Control: Gaining the Upper-Hand

If you can withstand the pressures from creditors long enough you will find that their collection efforts subside in due time. Eventually the debt is written off as a loss and becomes a corporate tax write-off. Ironically, the longer the debt remains uncollected, the better your chances are of getting a favorable settlement.

The Catch-22 Advantage

When you think about it, our credit reporting system provides little incentive for you to pay off your debt. If you ignore the debt long enough, you stand a good chance of never hearing from the creditor again. Seven years after the debt is written off, the negative listing disappears from your report altogether. But if you pay the debt sometime before the end of that period, the seven year cycle starts all over again— not exactly what one would call an incentive. It's like getting time added to your sentence for good behavior.

Understanding Debt Settlement

Many consumers launch into panic mode over notifications from collection agencies and prematurely turn to bankruptcy. Please don't do this! Instead, take some time to empower yourself and develop a better understanding of the debt settlement process.

Common Mistakes

For those souls brave enough to attempt credit repair themselves this should be your mantra: "I will not tip off the credit bureaus to what I'm doing." Once the credit bureaus are on to you you'll find it very difficult to get results. Mistakes that can tip off a bureau are far too many to list here, but you should know about some common ones.

About the 100-Word Statement

Many credit repair manuals recommend that you file a 100-word statement with your credit report explaining the circumstances of the negative credit that remains. We object forcefully, and recommend you never submit such a statement.

Seeing Results

The quickest way to evaluate the results of a successful dispute is to compare the new report you receive from the credit bureau to your previous report. Simply go down the list of negative items and see which ones have changed or been removed altogether.

Getting a Response

Don't be discouraged if you find the bureaus stalling or you receive multiple rejections. Restoring your own credit is not easy. The credit bureau is a bureaucracy. As such, don't expect it to behave like an individual. There is no one single person handling your case. If you send the bureau an angry letter in response to the bureau's rejection or stall, the employee who receives it will have no idea why you are fuming. You are better off simply resubmitting your dispute.

Sending Your Dispute Letter

There is no need to wait on sending your disputes. Send them as you get them done, provided that at least 90 days have passed since your last dispute to the bureau. Include original copies of the respective credit report with your letter. 

Drafting Your Dispute Letter

Start drafting your disputes immediately after receiving your report(s) and identifying the negative items. Don't wait for all credit reports to arrive first before drafting your initial dispute. Time is of the essence. If you tend to procrastinate you are better off seeking professional help to restore your credit.

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