So you want to use debt settlement to reduce your debts and improve your credit score? But the problem is you are not sure how to negotiate with creditors.
You need to uncover the hidden negotiator in you! But how? Below are helpful tips that will allow you to negotiate your way to having discounted total credit, through debt settlement.
Know your rights. – The government has provided the Fair Debt Collections Practices Act to ensure that people who have incurred debts will be treated with much dignity and respect. This is achieved through debt collection laws that outline the rights of debtors. You need to know these rights, so that you could protect yourself from harassing activities of debt collectors.
If your creditor is guilty of the FDCPA violation, contact the office of the attorney general in your state, or acquire informative pamphlets. In this way, you could ward off aggressive debt collectors while on your way to successful bad credit repair.
Know how much you can pay your creditors. – You need to know how much you can pay BEFORE you attempt to negotiate. Knowing EXACTLY how much you can offer will help you in the negotiation process.
I also like to have a “range” in mind before I call a creditor. I know how high I’m willing to pay before starting the negotiation process. And just like when you are buying a house, I start off with a low ball offer!
Think about your monthly income and expenses. Debt settlement is a good option. But be aware that most creditors will want a “lump sum” payment. They don’t want to give monthly terms.
When negotiating. Be sure to include how much you are going to pay your creditors, and when they can expect the payment from you.
Creditor won’t settle? If you don’t mind playing hard ball. You may tell the creditor this is your last ditch effort to pay your debts before going thru with filing bankruptcy.
If you file for bankruptcy, they know they will get $0. And they will be much more willing to negotiate with you and at least get something instead of nothing!
Not sure if you can negotiate on your own? It really isn’t difficult. Even the most introverted person can act as their own debt settlement agent.
You just need a game plan! You also need to remember that you are in control! Even if the creditor / collection agent gets abusive. You can control the situation by remaining calm.
Keep records of all your debt settlement offers – Once a creditor verbally agrees to your offer for settlement, you have to make sure that you record the conversation or keep notes about the deal you have made.
There are a lot of apps that make recording a conversation easy! When you call a creditor or collection agency, the first thing they do before you can talk to ANYONE is advise you they are recording this conversation. You can do the same!
Advising a collection agent / creditor they are being recorded also helps keep things from getting “heated” they don’t want to be caught being abusive!
Once you have settled on an amount. Always ask for a written agreement of your debt settlement on their letterhead! You also want them to sign it with their name and title. If they go back on their word, you can use the debt settlement agreement along with proof of payment to have it removed from your credit report. If they pursue legal action, the letter is your proof!
Improve your credit. Did you know that when done properly, debt settlements can help you improve your credit? When we have helped clients one of our most used tools is a “Paid for deletion” letter. This letter basically states that the creditor is agreeing to take this payment as payment in full AND they agree to remove the negative trade line on our clients credit report!
What hurts your credit is when you purposefully STOP making payments in order to gain leverage over the creditor.
Yes, the longer you haven’t paid on the debt, the bigger the discount you can negotiate. But you can still negotiate your debt even if you are not currently past due! I never recommend my clients to stop paying solely for the purpose of going back to negotiate a paid for deletion.
Still not sure if a debt settlement is the right option for you? Then maybe debt consolidation is a better option for you. With debt consolidation, you work with a debt consolidation company to make a debt repayment plan. Just remember you must qualify for the loan. If you have very bad credit, this may not be an option for you.
Debt settlement isn’t for everyone, but its a very useful tool for consumers looking to not only get out of debt, but to improve their credit score too!