In 2005, indie film screenwriter Kenny Golde's finances were in nothing short of mint condition.
"I had less than $10,000 in credit card debt, more than $100,000 in unused lines of credit, a FICO score over 800, and about $100,000 in savings even after the downpayment on my home," he says. "I even adopted a dog."
Then the bottom fell out. Within a year, a perfect storm of financial and professional mishaps would carry him down a seemingly never-ending rabbit's hole of debt. By his fortieth birthday, he had amassed a staggering $220,000 in credit debt and spent his days sparring with debt collectors, dodging lawsuits and doing all he could to keep bankruptcy at bay.
That was until an attorney steered him toward a path he never thought he'd travel: Debt settlement––essentially negotiating his debt directly with lenders.
"The journey took me about a year and a half," Golde writes in his book, "The Do-It-Yourself Bailout." Now "I have reduced my debt ... to zero. I have done this legally, at a fraction of the cost of the debt itself, and I saved just under $150,000."
Here's how he did it:
Golde had struggled for 11 years to secure financing for an independent film when he found his savior in a 70-year-old investor named Gabe.
Gabe pumped $560,000 into the project, but when Golde reached out to secure financing for another $170,000, he was told Gabe had been hospitalized. Within weeks, he passed away, and Golde was left to foot the bill himself.
On the brink of bankruptcy, Golde reached out to an attorney, who pitched the idea of debt settlement. When customers default on credit accounts, lenders are sometimes willing to settle debts for a fraction of their total value.
It was time to battle the banks
But in order to settle, Golde needed some leverage. Banks typically give customers just days to pay settlements in one lump sum. To buy time, Golde fielded phone calls for four months while he looked for work. Then luck stepped in.
"[My deceased business partner] Gabe had left his estate, along with his interest in the film, to his nephew," Golde says. "[His nephew] called me out of the blue to say that he would be able to [invest] an additional $45,000."
With $45,000 to work with, Golde came up with a strategy: starting with his three largest cards––a combined $137,000 between two banks––he set his mind on settling for no more than 33%.
Both refused his offers initially, saying they wouldn't break for less than 85 or 92 percent. He hung up and decided to stick to his guns.
It was all part of a script, he says: "As the script moved to the next lower stage, their level of cordiality did also. They insisted that I had signed an agreement to make regular payments on my loan and then questioned my honor and integrity, insinuating that I was a bad person for not paying off the debt."
After one false start––a bank mailed him a settlement agreement two days after his supposed payment due date––Golde finally had something to celebrate.
"[A debt collector] called to say they would take $27,000, 35.5% of the $76,000 balance [on one account]," he says. "I countered with $24,000 ... and he countered my $24,000 at $25,000, right on my target."
The highs were high and the lows were low
Banks have been known to threaten to sue customers who have defaulted on large balances, and Golde was no exception.
"The same week that I successfully settled my first credit card, I was served with my first lawsuit [by a different bank]," he says. His unpaid balance was $22,000.
Golde showed up in court all but certain that this was the beginning of his financial end. Then the judge spoke, telling everyone in the room to leave and try to settle things one-on-one rather than leaving the final decision up to him.
He still had a shot at negotiating.
"The lawsuit, like the escalating language on phone calls, was just another tool in [the banks'] box aimed at getting me to settle at the highest rate possible," he says.
After further phone negotiations, Golde wound up settling the $22,000 account for $10,000. The lawsuit was dropped.
He scored a $7,400 settlement on a $39,000 account next, then haggled another bank down from $23,000 to $9,300.
At the time, he had left his two smallest lines of credit current in order to keep a roof over his head and food on the table. With cash in his pocket from a couple successful screenwriting gigs, he was ready for the home stretch. Both accounts were settled.
Why he has no regrets
Golde admits he didn't leave the battleground unscathed. His home fell into foreclosure and his credit score was obliterated.
But "the process of being in charge of [negotiations] myself was extraordinarily empowering," he told Business Insider. "It was more satisfying and healing than had I filed bankruptcy and avoided that process."
Sharing the highs and lows of journey with friends, family and fans––he held a one-off seminar on debt settlement in 2009––was all part of the joy of negotiating.
"[During that time], so many people were going through it, so many people were behind on their credit debt and behind on their mortgage payments," he said. "It became OK to go out in public and talk about your finances in an open way. I hope this continues."
More From Business Insider:
7 Ways to Save on Halloween Spending