How to Make a Debt Settlement Offer

If you're behind on your debt payments, you may want to consider offering a settlement to your creditors. A settlement allows you to pay less than what you owe and effectively cancel out the remaining debt. While there are debt settlement companies that can negotiate for you, it may be more effective to make an offer yourself. Successfully negotiating a debt settlement requires confidence and a clear idea of what you want to achieve.

Instructions

1

Assess your finances to determine how much money you could use for a lump-sum payment. Generally, creditors will require you to make either one lump-sum payment or several smaller payments in order to settle a debt. If you don't have enough cash on hand, then setting aside as much money as possible should be your top priority.

2

Determine how much you're willing to pay the creditor to settle the debt. Creditors may agree to settle your debt for as little as 25 percent or as much as 75 percent of the outstanding balance, depending on how delinquent the account is and how much you owe. You should choose an amount that you think is fair and that you can comfortably afford to pay.

3

Determine who owns the account. When an account becomes delinquent, your creditor may choose to assign it to their collections department or sell it to a collection agency. If your account has been assigned rather than sold, it may be to your advantage to try and negotiate with the original creditor, if possible.

4

Contact the creditor or collection agency with the terms of your settlement offer. You can submit your offer in writing or over the phone. When you contact the creditor, you need to be as specific as possible regarding the terms you're comfortable with and make your argument for why they should accept your offer.

5

Be prepared to make a counteroffer if the creditor doesn't agree to your terms. If the creditor accepts your settlement offer, ask them to send you a copy of the agreement in writing before you send payment. You should also stipulate that your account be reported as "Paid" or "Paid as Agreed" to the credit reporting bureaus rather than "Settled."