Practical Tips for Negotiating Debt Settlement Successfully

Even as the American economy continues to grow, consumers in America continue to pile up debt. Even with the economy booming, many consumers find themselves struggling to get on top of their debts, especially on credit cards. The typical reasons are illness, natural disasters, loss of employment, and other unanticipated events leading to cash flows being disturbed and getting them into a deep debt. According to https://www.experian.com, average credit card debt is up nine percent over the last 2 years, but for cardholders with profound subprime scores, it’s up 26%. The Federal Reserve has also reported that the total consumer borrowing now stands at $3.9 trillion. When normal efforts to repay the debt don’t work out, debt settlement companies are often engaged to negotiate with the customer’s creditors to reduce the principal and interest to enable them to successfully address their debt.

Settling Debts May Be a Practical Solution for All

Card companies may be willing to settle debts for a fraction of the full amount if they realize that you are in genuine financial hardship and heading towards bankruptcy that will result in a total loss for them. Also, debt collectors generally buy outstanding debt very cheaply from the card companies and they can be willing to settle if they can still make a reasonable profit. Some practical tips on successful negotiation with creditors for a profitable debt settlement:

Expect the Card Company to Refuse to Entertain a Settlement Request

Many people believe that once they run up a huge balance on their credit cards, they can just concoct a story about how hard up they are and the card companies will be ready to negotiate and accept pennies for the dollar. This is actually really far from the truth as the card companies or their collection agents usually choose to take a very hard-nosed attitude to the settling of debt when a customer first approaches them. They will generally ask for proof of your financial distress and suggest various ways in which, you can make adjustments so that they are repaid in full. They are also likely to take the stance that the customer’s financial hardship is not their bother and it is up to the customer to figure out a viable way of repaying them in full.

Don’t Deviate from the Truth

When the person facing you or at the opposite end of the telephone line tries to fob you off, you should make an effort to present your facts very clearly as to why you are unable to pay them their dues. Do not present a jumble of facts but instead tell the main reason why you are behind in your payments and what you have done before approaching them to solve the problem. Do not attempt to concoct a story as you will be asked to provide proof at every step; don’t just expect them to take your word that you have lost your job, have incurred unexpected medical expenses or even have a divorce. Most debt settlement feedback available online suggest that the best course of action is to tell what the cause of the hardship is, how it has affected you, and why debt settlement is the only way to avoid a bankruptcy. Switching stories in the middle of the discussions will get you nowhere.

Avoid Theatrics

Debt collection agents have a variety of tricks to get you needled and make statements that can go against you. Resist all provocation and try to conduct the interaction as calmly as you can. If you think you are losing control, withdraw and tell them that you will resume discussions later on. Telling them that you intend to record the conversation is a great way of ensuring things remains civil as well as legal. Take notes of the main points of the discussion as well as the date and the name of the representative you are talking to so that you can quote any verbal agreement that was reached or if anything illegal was suggested to you. 

Know How Much You Can Settle For

There is no point trying to get the card company to negotiate unless you know very well how much you can really afford to settle for. You need to figure out how much of a surplus you have after meeting your expenses and if you can sell off an asset to bring more money to the table. You also need to list out all your debts so that you can negotiate equitable deals with them or appoint a debt settlement company to represent you. While the best settlements are normally possible if you can put down a lump sum, you can also negotiate to repay as per a payment plan that you can afford but make sure that you know what it entails over the full period.

Get the Debt Settlement Agreement in Writing

If you do manage to get your creditors to agree to a debt settlement plan that you find workable, you must get the offer in writing before you make a single payment. Verbal assurances have no meaning and are not enforceable so you may find yourself being pursued debts that you had assumed to have been settled.

Conclusion

Even though debt settlement appears to be extremely attractive, you need to know that there are far-reaching ramifications of settling for less than what you owe. You can be sure that your credit score will take a beating; the extent will depend on how the creditor reports it. Try and insist that it is reported as “settled as agreed” not just “settled”. Remember that the negative impact on the credit score will remain for as long as seven years on your credit report. If you appoint a debt settlement company, make sure it is a reputed one and its charges and fees are very clear to you. Steer clear of companies that ask for upfront payments or give assurances regarding the extent of debt reduction. Take intelligent decisions to survive the quicksand of debt.