"If you have a lot of unsecured debts," Detweiler warns, "then you're probably better off getting help from an outside source who can help you prioritize and deal with some of the more aggressive ones. But anyone with up to three creditors can certainly try to settle with them directly."
You want to know what information your creditors are looking at, Detweiler says, so before you try to resolve a debt, get copies of your credit report from all three major credit bureaus: Experian (www.experian.com), TransUnion (www.transunion.com) and Equifax (www.equifax.com).
Remember, you can get them for free at myBankrate.
Then stop paying creditors and start stashing money away in a separate savings account.
That's necessary because you can't settle a debt unless you have something to offer.
"To make it work," says Phelan, "you will need some money to settle with. Most people use a combination of monthly savings, tax refunds, proceeds from selling a vehicle, borrowing against a 401(k) on a hardship basis, or whatever help they can get from a family member."
Make an inventory of all your debts and write a budget to see how much you can realistically afford to pay to avoid being pressured into a settlement you can't meet, Detweiler says.
Phelan suggests having caller ID or some other call screening in place to cut down on harassment by phone.
The first phase of the collection process begins from the due date of the first missed payment, he says. "If you don't make any further payments, the clock is ticking up to the charge-off -- the point in time when the creditor formally takes the loss off their books.
"Up to that point, you are still dealing with the original creditor -- normally a bank's own in-house employees."
While you're unlikely to negotiate a good settlement in the early days of this first phase, it's a good idea to establish contact.
"I am not a fan of ignoring your creditors or collectors," Detweiler says. "Sometimes that can force them to become more aggressive. If you're having trouble making payment, let them know, but indicate what you think you can pay, and when. Talk amounts, not percentages.