If you are leaning toward debt settlement as your preferred strategy, the next decision is whether to use the do-it-yourself approach or hire a third-party professional settlement company to handle the negotiations for you. In this two-part article, I’ll discuss some important reasons why the do-it-yourself approach makes a lot more sense for most consumers than using a third-party settlement company.

Updated July 2015

This two-part article was originally written way back in 2006, and there have been a lot of changes since then in the debt settlement industry. I’ve updated this article to reflect the conditions consumers are facing in 2015 and 2016 forward.


The first big reason why Do-It-Yourself Debt Settlement is better than using a third-party company is the HUGE EXPENSE involved. With a professional company, you can expect to pay steep fees, period. Most debt relief firms have set up their contracts to benefit the company far more than they benefit the consumer. The standard fee quoted in the industry is 15-20% of the enrolled debt.

Important Note:The only legitimate fee structure under Federal Trade Commission rules is one based on fees charged only after successful performance of the service. Companies are no longer allowed to charge upfront fees like they used to. However, there are still companies out there that charge large fees upfront, under various approaches designed to get around the FTC ruling. Buyer beware!

Let’s say you have $50,000 of debt. You hire a settlement company that charges 20% of the enrolled debt. This equates to fees of $10,000, an absurdly high figure for the amount of work that goes into settlement of $50,000 of credit card debt spread across a few accounts.

This fee structure is HORRIBLE for consumers! Why? Because with the fees set at 20% of the enrolled debt, the debt settlement firm makes exactly the same amount on your case if they obtain 50% settlements as they do if they obtain 25% settlements across the board. Either way, they get $6,000 in fees. So where is their incentive to grind it out with the creditors to get you the lower percentage deals?

With the DO-IT-YOURSELF approach, there are no percentage-of-debt fees to worry about. So even if you don’t do quite so well as a professional negotiator at getting low percentage settlements, you’ll still save a pile of money in fees. And there is more than money to be saved. There is also TIME to be saved by getting out of debt much faster on your own. With your money going toward settlements instead of paying off huge fees, you’ll be able to complete the process that much more quickly.

You’ll get out of debt FASTER by doing it yourself, and you’ll save $1,000s in the process.


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One of the most attractive features of the debt settlement approach is its tremendous flexibility. Under virtually every other type of debt relief program, you are required to make a fixed monthly payment into the program. This is true of debt consolidation, credit counseling, and Chapter 13 Bankruptcy. Debt settlement is far more flexible, and it’s totally possible to skip a month if unexpected expenses arise.

That said, however, the least flexible approach to debt settlement is that offered by third-party debt companies, who set up “escrow” accounts from which to pay your settlements and deduct their fees. In other words, let’s say you suspend payments to your debt settlement program. Do you suppose that company’s negotiators are going to work on your file, talk to your creditors, and keep negotiating, when there is no way for them to fund a settlement or deduct their giant fee afterwards? Of course not.

This added flexibility is therefore another huge advantage of DIY debt settlement over hiring a company to do it for you. With DIY debt negotiation and settlement, you have maximum financial flexibility. Since you are in the driver’s seat, you are completely in control over your monthly funding level. You control the cash, and no one can cancel you if you need to skip a payment here or there!

The DIY approach to debt settlement restores the all-important flexibility that struggling debtors need in order to get back on their feet financially.

In the second part of this article, we’ll look at some additional reasons why doing it yourself is safer than using a third-party debt company to settle your debts.

Go to Part 2 of Why DIY Is Better

ZipDebt = Fast Relief

Debt settlement is just as much about managing risk as negotiating savings. The 36-48 month programs offered by most debt companies have high risk for collection lawsuits. It's far more effective to "fast track" debt settlement in 12-18 months.

ZipDebt = Affordable Help

Instead of paying fees as high as 20-30% of your TOTAL DEBT, it’s far more affordable to work with a professional consultant who only charges 15% of the SAVINGS achieved via the negotiations. This approach saves you money and creates a win-win scenario.

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