How to Offer a Settlement to a Debtor

Some debtors will settle their debt if they are given the opportunity. Whenever you offer a settlement to a debtor, the right conditions must exist. Once you decide to offer a settlement you may have to negotiate the amount that you are willing to accept. Debt collectors many times purchase delinquent debt for pennies on the dollar, so just about any amount collected represents a profit. You have leeway to make the offer enticing to the debtor and make a profit at the same time.

Instructions

1

Determine if the right conditions for a settlement exist. If you want to offer a debtor a settlement, they must be at least 90 days past due. You must also determine what their financial status is. You may have to ask questions to see if the debtor is working, or if they are facing some type of hardship such as loss of job, foreclosure, death in family or excessive medical bills. Ask the debtor if they have any money in savings and what are their other financial resources.

2

Make the offer. You should make the settlement offer to the debtor. According to MSN MoneyCentral, most creditors offer settlements in the range of 20% to 75% of the balance. Make a settlement offer which is near the high extreme, such as 65 percent. There is a good chance that the debtor may counter your offer or reject your offer. This gives you an opportunity to lower your settlement offer. Make another offer in the area of 40% to 45% of the balance. This can represent a substantial savings to the debtor. Many debtors will try to secure the funds from their available resources in order to pay the settlement.

3

Wait for the cash. When a date is set for the funds to be received, its just a matter of waiting. You may want to send written confirmation to the debtor a couple of days after the offer is made. The letter should reiterate the amount of debt that is going to be forgiven. This helps a debtor see in writing how much they are going to save. If the total debt is $7,000 and you offer to settle for $4,000, the amount of debt forgiven is $3,000. This will serve as a reminder. Your offer should have a deadline for the funds to be received. This helps to establish a sense of urgency with the debtor. They may fear that you will rescind the offer if they do not pay by a certain date.