Submitting a settlement offer to the collection agency handling your overdue bills can help you resolve the debt for less than you owe. While some agencies eagerly accept settlements, other agencies do not accept a proposed settlement offer. Having your initial offer rejected doesn't mean the agency won't accept subsequent offers.
What is a Settlement?
A debt settlement is a way for debtors to pay off balances owed to creditors. Debtors would ordinarily have to pay off the complete balance to satisfy the debt. But when this isn't an option, some collection agencies and creditors will negotiate a settlement. Settlements involve paying a collection agency or creditor a lump sum that's less than the existing balance on the account. Collection agencies may allow settlements when a borrower faces bankruptcy or other financial hardship.
Process
It's likely that a collection agency will not accept the first proposed settlement offer. For this reason, it's wise for debtors to start with an offer that's less than they can afford. This allows room for negotiating with the collection agency. Bankrate.com recommends offering an initial settlement amount around 30 cents on the dollar. Call the agency and speak with a person who handles proposed settlement offers. State your name and account number and present your settlement offer.
Negotiating with Agencies
Collection agencies want to collect on overdue balances, and most will negotiate a settlement that both parties can agree on. Don't budge on your offer if the collection agency rejects your proposed settlement. If you're planning on filing bankruptcy papers to eliminate your debts, mention this while negotiating with the collection agency. The collection agency will most likely counter with a higher settlement offer. Only agree to a settlement offer if you can afford the amount.
Considerations
To ensure that collection agencies uphold their end of the agreement, get written confirmation of the proposed settlement. You can ask the collection agency to send a letter outlining the terms of the settlement or you can send or fax a letter to the collection agency. The agency will sign the agreement and mail you a copy. Hold off sending your final payment until the collection agency provides a signed letter confirming the settlement agreement.
0 comments:
Post a Comment