Most debt reduction plans play a sort of “chicken” with your creditors. The way they work is that, when your situation becomes really dire, you stop paying as many bills as you can and start saving a pot of money that you will eventually use to pay all of them off. When you have saved enough, and when your creditors have become desperate enough, you negotiate to make them go away.

It sounds like a plan that might work – and it often does.

It works because of the crazy way the debt system works. There are unbelievably massive amounts of personal debt in the world, and a system set up to handle it. In this system, many people try to avoid paying their bills, but if the debt collectors keep after them long enough, they will pay. True commitment to debt avoidance is actually rare, and people being chased by debt collectors usually hide, but they don’t resist. That means the average low-level debt collector is trained and required to keep after you and has little, if any, authority, to negotiate with you. And these are the only people you will encounter until your resistance has passed a certain level. You must go higher up “the food chain” to reach people with real authority to negotiate with you, and this does not happen easily. In many cases it won’t be until the company has hired a lawyer.

So the idea behind debt relief is to withhold payment until the company moves you up the debt collection food chain to the bigger guys with more authority.

Of course the company will sometimes sue you instead of negotiating at that point, and this has been one of my objections to the whole debt relief scheme. You will undoubtedly be doing your credit report some short-range damage if you do not pay bills you could, and you may increase the likelihood of being sued. A debt relief company will often encourage you to take risks and sustain damage before they will or can negotiate for you. If it doesn’t work out that way, you are the big loser, and they simply find someone else to try it with.

My other objection to the way debt relief companies have done business is that they charge a lot for their services. It is my belief that most people can, if they really decide to do it, probably do as good – or almost as good – a job at debt settlement negotiations as the “pros” they hire to do it for them. After all, most of what these pros have going for them is simply the knowledge that that most creditors will, eventually, negotiate.

I have been asked about doing debt relief often enough that I have simply had to recognize that some people would feel more comfortable having other people negotiate for them even if they have to pay for that service. I have found a service that helps address some of my other concerns as well, the prepaid legal program I represent.