Negotiating Debt Settlements: What You Need To Know

Negotiating Debt Settlements: What You Need To Know

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With so many people struggling to get out of debt, you might have heard about negotiating debt settlements. If you're struggling with credit card harassment and debt collectors calling at all hours and want to get off the debt roller coaster, then this might be a good way to do it. Before you get started, however, you need to know a few things.

What is debt settlement?

Debt settlement is when you call a creditor or debt collection agency and tell them that you don't have "X" amount of dollars to pay the whole debt, but if they agree to consider the case closed and that the debt has been satisfied, you can come up with a smaller amount instead. Many debt collection agencies have actually started to offer the opportunity to settle your debts before you even ask because it's an easier way for them to get their money.

In a perfect world, the collection agency would agree to mark your debt as having been "settled" on your credit report. This isn't nearly as good as showing up "paid" but it can still be beneficial to your overall score. Once in a while, you can actually negotiate your credit report to show as "paid," but this will depend on your creditor.

How can you do it?

You can settle your debts on your own and there are a couple of ways to do it, but you should make sure that you have the funds available to stick with the arrangement you make with a debt collector.

* Determine if you have a certain amount of money to work with or if you will be negotiating payments to be made. If you have a certain amount of money, you will want to decide how much will go to each debt. The idea is to settle as many debts as you can, so don't let one collection agency drive your negotiations to a screeching halt.

* If you will be making monthly payments, you should decide what you can afford. Do not go over this amount, as it will hurt your budget. Keep in mind that many of your debt collectors have been waiting for a while, so if you have to, make them wait a little longer. Debt settlement is a process that might take some time.

* Next, it's time to negotiate with your debt collector. Tell them that you have a certain percentage of the debt, and would like to settle. If they tell you that they cannot settle for that amount, simply tell them thank you and move on to the next debt. Repeat the process until all of your debts are on their way to being settled.


* Get everything in writing. Do not ever send payment without written confirmation of your debt settlement agreement. If you don't get a letter, your creditors don't get the money. This is your hard copy to show the credit bureaus.

There might be more than just four steps to your debt settlement process, but once you work out a budget and make sure that you're ready to settle your debts, you will likely find that many debt collection agencies are more than willing to work with you and you could be well on your way to being debt free.

About the Author:
Sergei Lemberg, Esq. is the Principal of Lemberg & Associates, a law firm specializing in fair debt collection law, lemon law, and other consumer law.



Article Originally Published On: http://www.articlesnatch.com


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