The Ins and Outs of Negotiating Debt Settlements
Negotiating debt settlements sounds neither fun nor easy, and while it may never be any fun, you can learn how to cope with creditors and make reasonable negotiations that are win-win situations for everyone involved.
At first the task seems daunting and time-consuming.
The fact is, creditors are people, too - people who have extended you credit and money, and are hoping to be paid back.
Many are willing to settle for a lesser amount of debt, eliminate fees and interest, and work with you to repay what you owe in whole or in part.
Many are just happy to not have to spend extra time and money on a debt collector or debt collection agency, so they are willing to be a bit flexible.
Below are a few tips to negotiate a debt settlement that works for you and satisfies your debt.
Be Honest and Logical If you do decide to negotiate over the phone with a debt collector or creditor, ensure that you have everything documented for your files.
Note the time, date, and details of every conversation.
Some people get very emotional and high-strung when it comes to owing money.
Take your feelings of guilt, embarrassment, or whatever is attached to the situation and put them aside.
Instead, use that energy, and your notes, to be calm and logical.
You are working in your own best interests, and crying, getting angry, or hollering will not help your negotiations.
Let your creditor know that you are currently unable to afford the minimum payments on your current debt, and ask for the options available to settle your debt.
Close Your Account If you cannot pay on your credit cards, you will need to close those accounts in order to stop accruing interest and late fees.
After the accounts are closed, try to negotiate for a smaller amount of repayment to be made over time.
For example, if you owe $5,000, and half of that amount is accrued interest and late fees, see if you can settle the debt for $2,500.
Some suggest starting your offer as low as 30% of the original debt and work from there.
Brace for Impact (on Your Credit Report) Debt settlement can be tough on your credit at first.
Once you have made negotiations and pay them properly, on time, and in full as agreed, start working on repairing your credit.
Additionally, see if you can get the collectors to note that the debt was paid off satisfactorily instead of for less than what was due.
This can help your credit history not look so harsh - which will help you when you're ready to apply for loans and mortgages in the future (once you're back on your feet).
By following these tips, you can start negotiating reasonable settlements for the money you owe.
But if you're still unsure or don't feel comfortable making negotiations, you may wish to employ the assistance of an experienced debt collection attorney, one who can prevent credit card harassment and help you with a fresh start.
At first the task seems daunting and time-consuming.
The fact is, creditors are people, too - people who have extended you credit and money, and are hoping to be paid back.
Many are willing to settle for a lesser amount of debt, eliminate fees and interest, and work with you to repay what you owe in whole or in part.
Many are just happy to not have to spend extra time and money on a debt collector or debt collection agency, so they are willing to be a bit flexible.
Below are a few tips to negotiate a debt settlement that works for you and satisfies your debt.
Be Honest and Logical If you do decide to negotiate over the phone with a debt collector or creditor, ensure that you have everything documented for your files.
Note the time, date, and details of every conversation.
Some people get very emotional and high-strung when it comes to owing money.
Take your feelings of guilt, embarrassment, or whatever is attached to the situation and put them aside.
Instead, use that energy, and your notes, to be calm and logical.
You are working in your own best interests, and crying, getting angry, or hollering will not help your negotiations.
Let your creditor know that you are currently unable to afford the minimum payments on your current debt, and ask for the options available to settle your debt.
Close Your Account If you cannot pay on your credit cards, you will need to close those accounts in order to stop accruing interest and late fees.
After the accounts are closed, try to negotiate for a smaller amount of repayment to be made over time.
For example, if you owe $5,000, and half of that amount is accrued interest and late fees, see if you can settle the debt for $2,500.
Some suggest starting your offer as low as 30% of the original debt and work from there.
Brace for Impact (on Your Credit Report) Debt settlement can be tough on your credit at first.
Once you have made negotiations and pay them properly, on time, and in full as agreed, start working on repairing your credit.
Additionally, see if you can get the collectors to note that the debt was paid off satisfactorily instead of for less than what was due.
This can help your credit history not look so harsh - which will help you when you're ready to apply for loans and mortgages in the future (once you're back on your feet).
By following these tips, you can start negotiating reasonable settlements for the money you owe.
But if you're still unsure or don't feel comfortable making negotiations, you may wish to employ the assistance of an experienced debt collection attorney, one who can prevent credit card harassment and help you with a fresh start.
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