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However, the author and publisher are not engaged in rendering accounting, legal, investment, or tax advice or services through this or any other publication. If legal or other expert services are required, the services of a competent professional should be sought. All information here is not to be construed as legal advice, it is not. This manual was designed to give correct and helpful information, but there may be typographical errors and mistakes in content. Care should be taken to use this manual as a general guide to the information contained herein and not as the ultimate source of this type of information, In addition, the information in this manual is up-to-date only up to the date of publication. Many of the items in this manual will not be exactly as described as time goes on. The publisher and author of this manual shall not have liability responsibility to any person or other legal entity in regard to any loss or damage caused or alleged to be caused either directly or indirectly by the information or the use of the information contained in this book.

Debt settlement or debt negotiation is a means for resolving debt obligations through partial payment to a creditor. A creditor may be willing to accept a portion of the debt to satisfy the obligation. Sometimes the costs of pursuing a judgment are so high that the creditor would rather accept a reduced payoff in order to clear the account. Creditors lend money with the intention of getting it back. They always try to recover default or charged-off loans in some way or other. Settlement is definitely an attractive offer and this helps creditors get their money repaid without spending funds for collection.

Typically people in need of Debt Settlement are people who have suffered some type of financial hardship. This can range from job loss or divorce to medical issues. Debt Settlement is for people who are deep in debt and are without the means to repay their creditors. These types of people should be the only ones to use Debt Settlement. Debt Settlement should not be used by someone who is simply trying to escape their financial obligations. That is the reason most credit card companies and other lenders show interest in the debt negotiation process. They can reduce the debts by 40%-60% of the debt balance.

Debt settlement can be done by you or a debt settlement service company. If you use a third party to settle your debt they will charge you a fee. The fee can vary depending on

each company. It could be 12%-15% of the total debt or up to 30% of the total amount they save you plus they might have a monthly service fee ranging from $10-$35.

When is the right time to settle your debts? It is very important to take the right decision at the right time; otherwise you might not have the full benefit of the program.

One month delinquent: When you are just one month behind with your payment, your creditor might agree to reduce 70% - 75% of the total debt amount. Since much late fees and financial charges have not been added to the principal amount by this time, settling at this stage could be the best decision.

Six months delinquent: Though your creditor might accept a 50% settlement offer at this stage, it does not mean that you end up paying lesser amount if you settle lately. Since you have missed six consecutive payments, you have already accumulated lots of late fees and other financial charges. As a result, the principal debt amount is quite high by this time.

Charged-off account: If the account is charged-off, it is likely that your creditor would sell the account to a debt buyer. Dealing with these debt buyers is a nightmare. They

often charges collection fees and deny to accept any repayment plan. However, a professional debt settlement company can help you settle your account with collection agencies.

Creditor is going to sue you: Creditor can file lawsuit against consumer. Once a judgment enters your credit report, it stays there for 7 to 10 years. If you have received summon already, settlement companies are unlikely to work with you. However, there are certain law firms and attorneys that can guide you to get an out-of-court settlement.

Types of Account:

Following Accounts can be included in debt settlement:

Credit Cards Medical Bills Department Store Card Line of Credit

Following accounts cannot be included in debt settlement:

Auto Loans Mortgages Tax Liens Child Support

First Steps to Settle Your Debts: In order to settle, you must first be able to make an upfront payment of 35-65% of the existing debt balance with one of your collectors. You can do this by making a monthly transfer into a savings account until you reach a potential settlement amount. You may also find other ways to come up with the money, such as: Selling your property Refinance your home Using a tax refund Using 401K, IRA, Stocks, or Bonds Selling your vehicle or exchanging expensive car with less expensive car to save money Selling valuable items through online auctions

Borrow money from friend or relative Get money from websites like www.prosper.com etc.

Second step is presenting your proposal or offer: Creditors are going to do take every step to collect money that you owe them. You need to show the creditor that its the hardship that you are going through and show them that its in their best interest to settle for less than the full balance to avoid filing for bankruptcy. If you lost your job or have some kind of other hardship, let the creditor know. Before the creditor is going to forgive thousands of dollars, they need to be convinced. A settlement should be in writing. It should spell out the major provisions of your agreement. Never send in payment based on a verbal promise!

To sell your side of the story, you must present the personal side of the situation and may offer the following: The contract should clearly state identifying information, including the collector name and address, debtor name and address, date of the agreement, purpose of the contract (debt settlement) and the account information (account number, account balance, original creditor). Mention the total amount of debt owed with all creditors.

An agreed settlement amount should be stated, and it should also include a clause whereby payment of the settled amount would be deemed to fully indemnify the debtor from any future claims by any claimant regarding the debt. Explain assets have been liquated, or how the source of funds has been arranged. Some savvy debtors also get agreement that the collector will remove any negative information from all credit bureaus regarding the debt. Credit bureaus disapprove of this process, but it is still allowed. In most cases, the original creditor would still show negative information. Another common clause is a statement summarizing that while you do not acknowledge the validity of the debt, you would like to close the issue. Show an urgency issue by stating that funds are depleting rapidly. Include a financial statement showing your monthly expenses. Include documents regarding your hardship. Such as: Current medical bills Letter from doctor diagnosing your present condition Disability statement if applicable Personal assets and liability statement showing that you are overextended to the point of bankruptcy and list assets you will sell to get funds to settle the debt Letter from attorney showing that you are in the process of possibly filing for bankruptcy

Letter from other creditors that they have already settled or are willing to settle their debts Current credit report showing that you are severely delinquent

By presenting these elements properly and showing an honest scenario that make sense to the creditors to justify the offer, it can result in a resolution to forgive a percentage of your debt.

Keep in mind that when you negotiate your own settlement, you are taking on responsibilities that might otherwise be handled by a settlement company or attorney. It is usually well worth it to settle on your own rather than using these expensive representatives. However, you should educate yourself to make sure that you cover all possibilities so that you are protected from additional legal action.

Step Three is Offer Gets Declined or Accepted: If your offer is declined you dont need to be discouraged. You have to keep in mind that you are negotiating with the creditors. The process of negotiation takes time. If your offer was declined the first time then you need to schedule a follow up in 30 to 60 days. You can send a new settlement offer with a little higher amount than the previous offer. The creditor will eventually accept the offer because the rather have something than noting. They know if the client files for bankruptcy they will get nothing. So be patient.

If your offer is accepted make sure that you request a written settlement acceptance letter. You can have it send to you via mail or faxed. After you receive the settlement acceptance letter then only you should make payment to the creditor via check or credit card. This will satisfy their account in full.

How long negative items stay on the credit report

Good credit - 10 years or longer.

Negative credit (late payments, collections, charge-offs, closed accounts, child supports, civil and small claim judgments, paid tax liens) - 7 years.

Chapter 7, 11 and 12 Bankruptcy - 10 years

Chapter 13 Bankruptcy - 7 years

Unpaid tax liens - 10 years

Inquiries - 2 years

ASSETS/LIABILITIES/INCOME WORKSHEET

Name: ______________________________________

Date: _______________

ASSETS house (current value) other properties Purchase year: _______

JOINT

CHILDREN

savings accounts (personal) checking accounts (personal) stocks/bonds/etc. (not retirement) retirement plans

non-term life insurance (cash surrender value) automobiles (blue book wholesale value) boats, motorcycles business business banking accounts other:

TOTAL ASSETS:

LIABILITIES mortgage home equity loan auto loan credit cards other loans ___________________________ TOTAL LIABILITIES

INCOME SOURCES (annually)

TOTAL INCOME On the back of this sheet, please write each bank name (etc.), account name, account number, balance, date of balance.

(C) checking (S) savings (M) money market ____ ____ ____ ____ ____ ____ Whose? __________ __________ __________ __________ __________ __________ Bank name Account # Balance Date _____________ _________________ ____________ ___________ _____________ _________________ ____________ ___________ _____________ _________________ ____________ ___________ _____________ _________________ ____________ ___________ _____________ _________________ ____________ ___________ _____________ _________________ ____________ ___________

(V) Visa (M) Mastercard (A) American Express ____ ____ ____ ____ ____ ____ ____ Whose? __________ __________ __________ __________ __________ __________ __________ Account # Balance Date _________________ ____________ ___________ _________________ ____________ ___________ _________________ ____________ ___________ _________________ ____________ ___________ _________________ ____________ ___________ _________________ ____________ ___________ _________________ ____________ ___________

Investment and Retirement Accounts: What __________________ __________________ __________________ __________________ __________________ __________________ __________________ Whose? _______ _______ _______ _______ _______ _______ _______ IRA, 401(k), Date pension? Started Account # Value As of Date

__________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________ __________ __________ _________________ __________ ___________

Other:

Sample Debt Settlement Offer Letter

Your Name Your Address Your Phone number Date Creditor Name Creditor Address RE: Collections Letter dated __________on Account #_________________

Dear Sirs, I realize I have become seriously delinquent on this account. Due to (hardship--------------------), I have been unable to make payments on my account with you. In light of this dilemma, I have liquidated (type of asset, e.g.401K,Car,house etc) in hopes of avoiding bankruptcy. In order to save both of us time and expense, I would like to make arrangements to settle this account. The last statement that I received from your organization dated ________ showed a balance due of ____________, I have allocated a lump sum of $(_________) which I will be able to send you a Cashiers Check within 5 days of receiving the written agreement from your organization. In accepting this settlement offer, your organization agrees to: Report debt as Paid as Agreed, Closed by Consumer Accept _________ as payment in full for the account. I agree to: Send Cashiers Check in the amount of _________ within 5 days after receiving the written acceptance of this offer. If you wish to discuss this further, I can be reached by phone at ______________ between the hours of _______________________. However, please understand that I will make no payments until I receive written confirmation that you accept my offer. Best Regards,

(Your name)

Sample Letter to Stop Debt Collection Harassing Calls

YOUR NAME YOUR ADDRESS CITY, STATE, ZIP CODE

Today's Date

Place collector's name here Collectors address Collectors city, state, zip

RE: Acct.#

Dear (place collector's name here): This will serve as your legal notice under federal law, The Fair Debt Collection Act, to cease all communication with me in reference to the above account. If you fail to head this notice, I will file a formal complaint against you with the Federal Trade Commission who is responsible for enforcement, and the American Collectors Association, and the State Attorney General's Office. I have decided that we do not desire to work with a collection agency under any circumstance. We will contact (whomever the original creditor is) to resolve this matter directly. You are also notified that if any adverse items are placed against my credit report as a result of this notice, I will be forced to take appropriate action against you, and concerned parties. Give this matter the attention it deserves.

Yours Truly,

Your signature

SAMPLE LETTER (to stop communications from debt collectors, dispute the debt, notify creditor of exempt income). You can use any or all of the three paragraphs in the sample letter. Your Name Your Street Address City, State, Zip Todays Date Name of Debt Collection Agency Street Address City, State, Zip CERTIFIED MAIL RETURN RECEIPT REQUESTED Re: Account No. (your account number here) To Whom It May Concern: I am writing to formally request that you stop all communications to me regarding this debt. The Fair Debt Collection Practices Act, 15 U.S.C. 1692c, requires that you honor this request. Moreover, under New York City Law, it is against the law for you to call and speak with me about a debt more than twice in a seven day period. N.Y.C. Admin. Code 5-77. I am writing to request that you verify the above debt as required by the Fair Debt Collection Practices Act. 15 U.S.C. 1692g. I dispute that I owe this debt. Please send such verification to me at the above address. Moreover, my only source of income is exempt from collection. I have no income or assets that can be lawfully collected for an enforceable claim or debt. This letter serves as notice of the fact that I do not have any assets or income that are subject to collection under the law. In the event this debt is sold, this letter shall be included in my file to ensure that the buyer is put on notice of the same. If you or any subsequent holder of this debt attempts to attach exempt funds in order to collect this debt, you will be subject to wrongful attachment litigation.
MFY Legal Services, Inc. 2006. All Rights Reser

Thank you for your time and attention to this matter. collectors) SAMPLE LETTER (to stop communications from debtYour cooperation will be appreciated. Sincerely,

Sign Your Name Here