Settling Debts On Your Own: Negotiating With Creditors
Credit card debts and other debts are often sold to collection agencies after they are delinquent by a certain time period (this varies from creditor to creditor but is generally 90 or 180 days). At this point, the collection agency rather than the original creditor will pursue the debt until it is paid and the original creditor reports a "charge off" on your credit report. Your credit score will be damaged. If possible, it's always best to avoid having your debts get to this point; you can deal with your creditors on your own, but it's a good idea to work with an attorney, professional debt management service or debt counselor. Debt negotiations can be a difficult and lengthy process and most likely your time is better spent elsewhere. If you only have a small amount of debt and you really want to go it alone, the following tips can help you negotiate the best settlement:
Tip #1 - Communicate
When you're dealing with your original creditor, it's a good idea to contact them directly by phone (something usually not done with collection agencies). It can be a little daunting to call someone who you owe a large debt to; which is one reason a lot of consumers use debt management services. Before you make that call, find out if your debt has been sent to collections or is still with the original creditor. Call them and tell them you're willing to work with them to pay what you owe. This can prevent your debt from being sold to a collection agency.
Tip #2 – Plead Your Case
Unless you're already at least three months behind on your payments, creditors aren't going to negotiate any form of settlement with you; and since so far, you've been in good standing they have little incentive to do so. It's not uncommon to make a late payment now and again and other than paying some late fees or interest payments, there's really nothing else to it. Most consumers typically return to making regular payments. If you want your creditor to settle with you, you need to make the argument that you cannot afford to keep making your payments and other than garnishing your wages, a settlement is the only way they're going to be able to recoup their losses. If they're not receptive to this, you can get some professional help and threaten to file for bankruptcy; since your creditor will probably get nothing at all in this case, they may be willing to settle with you at this point. Keep in mind that these are professionals with a lot of experience you are dealing with on the other end of the phone, and they will likely attempt to intimidate you. Most creditors will take the stance that they don't ever settle for less than the owed balance. This is part of why consumers have such difficulty negotiating on their own. Most consumers simply don't have the inside track on exactly what creditors and collectors are willing to do and how far they can be pushed.
Tip #3 – Try Negotiating For Repaired Credit Standing
Even after a settlement has been made, there will usually still be the negative trade line "not paid as agreed" on your credit report; or perhaps "settled for less than full balance". These are basically the same as having a "charge off" or accounts marked as delinquent, but at least they will show a zero balance owed. When negotiating for a settlement with your creditors, try to get them to report these accounts as "paid as agreed". Unless you do actually pay your debt in full, you probably won't be able to get them to report paid as agreed; but you might be able to do this if you can negotiate a waiver of penalties and interest charged, making it easier to pay in full. It is always worth an attempt.
When You Should Seek Professional Help
You might be able to take care of one or even a couple debt negotiations by yourself – but if you have many delinquent accounts or a large sum of debt owed, it can be too much to juggle on your own. However, most people who are in such serious financial trouble that they're considering debt negotiation have more than one past due account in need of settlement. If you only have one delinquent account, your creditor probably won't be willing to settle anyway since you're keeping current with other accounts. Most of the time, professional help is the way to go to get a handle on your debts. nationwidedebtsolutions.com is dedicated to helping consumers make wise choices and connect with the most appropriate debt solution to manage their debt.
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