Nobody wants creditors knocking their doors for money! People are apprehensive about talking to creditors because they assume that the loan sharks would want all their belongings and want them upfront. The truth is, creditors can be negotiated with and sometimes you can put your worries to sleep by paying pennies for a dollar and have a full and final debt settlement. The following tips and tricks will you understand the debt settlement issues and settle your debts.
Ask For A Discount
Most creditors would offer you to go for debt settlement by paying 50% of what you actually owe them. Most would offer this kind of a discount during the festive season like Christmas, Thanksgiving etc. and if the offer’s good enough it’s advisable to take it. Sometimes the creditors try to get a bit sneaky and it’s recommended that you don’t throw away the offer letter sent by them. If the creditor doesn’t come up with an offer, it isn’t a bad idea to ask for it yourself. This gesture could win you a good deal because the creditor would know that you’re serious about your debt settlement and not wasting their time. You could draft a letter stating that you agree to pay 50% of the amount due under the condition that the creditor would close your account after receipt of payment and issue you a final debt settlement letter after receipt of payment. Send across the letter top your credit company through registered post and wait for them to reply back. Chances are, the loan company would fall for it and agree with your terms and conditions.
A Proper Proposal Can Work Wonders
Keep in mind if your terms get accepted by the creditor, it’s you who’s going to be on the winning side, so make sure the letter you send to them is attractive enough to make them agree to the terms of debt settlement. Make sure you include the actual sum that you are willing to pay, the mode of payment and the time when you wish to make the payment.
It’s important to make your debt settlement offer look acceptable to them, but it’s equally important to weigh the “ifs and buts” and hence, do not agree with anything and everything that’s thrown your way by them. You do not want to go broke trying to make a full and final debt settlement. Draft your letter keeping in mind your comfort level and not theirs.
Don’t Negotiate Over The Phone
A very big mistake that many people make is not putting all the terms on paper and discussing everything over phone. Don’t make the mistake of negotiating over the phone. Most credit companies have voice recording systems and they would keep record of everything that you said over the phone and conveniently produce them against you if the need be. If you get a call for final debt settlement, talk to the representative, but do not commit to anything over the phone. Put down everything in black and white and keep copies of all documents you send or receive.
9 Tips For Debt Settlement
It feels suffocating to receive calls from creditors for debt settlement and given a chance all of us would love to throw fads of cash on the face of the collector and make a full and final settlement right after we’ve received the first communication from the creditor! Alas! That’s doesn’t happen in reality for most of us, because if the money were there we wouldn’t have run into a debt at all. Be it a car loan, credit card or any commercial loan, the following nine tips wo9uld help you make an effective debt settlement without hassles.
- 1. Talk To The Bosses
Quite often we do not take that extra initiative to talk to people high up on the chain and remain restricted to recovery agents and tele callers trying to talk us into unprofitable debt settlement plans. Stop wasting time arguing with low level executives and try to find out the key person capable of taking decisions all by himself and urge him to help you.
- 2. Talk About Your Problems
Most of the time we end up falling prey to unsatisfactory debt settlement plans thrown our way buy the creditors. The ideal way to do it is talk to them about the problems you are facing in real life and how miserable your life has become with this debt burden. Don’t hesitate to propose terms that look beneficial to you, but also keep in mind that they need to be able to see the real money in your “sales pitch”.
- 3. Make Sure All Communications Are Documented
Don’t waste your time focusing on automated phone calls or calls from debt settlement agencies. Attend to a call if there’s one, but make sure that you don’t agree to anything that’s offered over the phone. Tell them to write to you and reply to them in writing. The creditors do keep records of phone calls, but we don’t and such records could land us in legal soup. Make sure all communications sent by the creditor are duly signed by authorized signatories.
- 4. Never Fall For Scare Tactics
Debt settlement agencies often use scare tactics to scare you into making a payment or start paying monthly installments once again. Hold your ground and don’t get scared by those blank words. If you start paying monthly installments once again, you’d find yourself in deeper soup and it would take umpteen years before the creditor lets you walk free.
- 5. Know Your Rights
Many debt settlement agencies use or threaten to use unscrupulous means to recover debts. Don’t be scared, the state laws are always in your favor. Just know your rights and tell the rogues that you’d be bound to take legal action if they cross the line. Take out some time for yourself and formulate a plan to effectively settle the debt.
- 6. Make A Low Offer First
Once you’ve decided that debt settlement is your best course of action, let the creditor know that you are ready to pay up and never offer to pay what you are capable of; always start with a low offer and if the need be slowly increase it. The creditor would also know that you are trying really hard to clear the debts and might offer you a good deal.
Know what your rights are. Many collection agencies employ outright illegal or borderline illegal tactics when pursuing debt collections. There are methods you can use to stop the harassment, give yourself time to think, and formulate a plan.
Make sure your first offer is a lot lower than what you actually are able to pay. Debt settlements tend to go through a negotiating process where you and the creditor will be throwing offers and counter offers back and forth in an effort to reach a mutually acceptable agreement. By starting low, you are more likely to hit a favorable compromise through negotiation.
Make contact with your creditor as soon as possible once you decide pursuit of a debt settlement is the best course of action. As soon as you start to fall behind with your loan payments, get in touch with your creditor and begin a dialog on how to solve the problem. Don’t wait until they are banging on your door demanding money before you try to explain the situation. Early and regular communication usually leads to a better solution. You should also keep in mind that debt settlement usually only comes into play when you absolutely can’t make monthly payments.
Don’t get carried away with your negotiations and never, I say again, never threaten the creditor. You can and should consult a lawyer, but don’t do so in order to bring a lawsuit against a creditor when you legitimately owe a debt. If you are being hounded for a debt repayment that you don’t actually owe, then there is a legal process you can follow and still avoid a court battle.
Keep in mind that you will probably have to pay income tax on the debt settlement so you should keep some extra money set aside for this purpose.
These debt settlement tips should help you find your way through the minefield of negotiating with creditors. If in doubt, you can always seek the assistance of a credit counselling service or a qualified lawyer.