Tips for Negotiating Debt Settlements

Although facing debt that has gone into default is never easy, ignoring the onslaught of collection notices and phone calls can be a far bigger stress booster than negotiating toward a resolution. The fact is that credit card companies and collection agencies would much rather receive something than nothing. With that in mind, devising a strategy for debt settlement is the best way to introduce compromise between yourself and those to whom you owe money.

Offer Feasible Payments

To negotiate effectively, you must know exactly how much you can afford to pay back on each debt. Open all collection notices and create a debt settlement budget that you know is sustainable. During negotiations, it is better to offer small payments that you know you can make than to promise large payments that will inevitably lead back to default. If you can afford to pay half of the full amount or a certain percentage, this can be used as a bargaining chip.

Initiate Contact

Make phone calls and write letters. Better yet, do both. Use a notebook to create a log for each call made. Note the date, agency name, the name of the person with whom you spoke and the details of the conversation.

Negotiate

Negotiate your debt settlement. Negotiate for lower interest rates. Tell each company or collection agency exactly what you can afford each month to pay down the debt. If affordable, offer to pay half of the amount owed or a reasonable percentage as a way to settle in full. Many of your debtors already may have offered this option in their collection notices and should be more than happy to comply. Make sure that all agreed-upon settlements are put into writing.

Agency Option

An option to negotiating debt settlement yourself is to consult with an agency that specializes in settling debt for a fee. You provide an agency with your debt information, the agency contacts your debtors to negotiate settlement and you send a monthly lump sum to the agency, which then makes monthly payments to your debtors. If you choose this option for negotiating debt settlement, be aware of fraudulent agencies and do your research. A link to Lexington Law Firm, a reputable company that has helped millions of people settle debt, is provided below in Resources.