Often when a consumer is up to their ears in debt and
toying with the idea of filing for bankruptcy, but either
can’t file or doesn't want to, there are other options.
Were you aware that the consumer can negotiate with
their creditors and end up paying a significantly smaller
amount than what is owed?
The Factors Involved In Negotiating Your Debt
Depending on many factors, a consumer can negotiate
their debt down. Some of the factors include the age
of the debt, the date a payment on the debt was last
paid and the amount of interest and fees that have
been added to the debt owed. Sound interesting? Read
on it gets better.
Before going any further it is important to mention
that this path is not easy, creditors are often not
nice to deal with at the best of times. When you are
the object of their attention, you can be inundated
with rude and threatening phone calls, nasty letters
and many other tasteless tactics used by some companies
to get money out of you.
If you can learn to be un-swayed by these tactics
and remain calm and level headed through out the whole
process, you are well on your way to sorting out your
debts and paying much less at the same time. The reason
that creditors resort to these sorts of tactics is
that it is about all they can do to get the debts
paid to them. Medical bills, store cards and credit
cards are called unsecured loans. This means that
they have no collateral tied to them.
The Problem
When a consumer stops paying their bills, the creditor
has a few options. They can try bullying you into
paying the debt or they can take you to court and
hope that they receive a favorable ruling in order
for them to come to your house and remove possessions
to cover their bills. The latter is not commonly practiced
as the risks of getting an unfavorable verdict from
the judge are considerable. Besides that, it is probably
hardly worth the trouble since these types of debts
are usually considerably smaller than secured loans,
such as houses and cars.
Where To Start Your Negotiations
So how much can you offer a debtor and have it accepted?
There is no set figure or sum and no guarantee that
a company will accept your terms. However, if they
have a choice between being paid something or nothing,
they are going to choose some of the money any day.
A good guide to begin your negotiation is 25% or less
for debts that have recently been charged off. Often
you can offer much less if the debt is older and the
company has added a host of other fees and charges
to the debt.
Ok so you are ready to negotiate? Hold on a minute,
there are a few more things that you need to arm yourself
with before going off to credit battle. Remember the
best defense that you can have is to know exactly
how your opponent works and what you can and can’t
do.
Tips To Negotiating Like A Pro
Below are a few helpful tips:
- Never negotiate over the phone, in fact, if a creditor
contacts you by phone- hang up. All of your correspondence
should be conducted by mail.
- Record everything; keep letters, numbers and dates.
Never expect that an agency will remember what was
agreed on or keep their word without proof.
- Keep copies of every letter that you send to the
credit agency and make sure to use registered mail,
or mail that has to be signed for. That way you have
proof that the other party has received your correspondence.
- Never seem to be too eager to settle the debt too
soon, never accept the first or second settlement
offer and above all, never let the agency think that
it has the upper hand.
Another useful approach is the good old threat of
bankruptcy. While its not as easy as it once was to
file bankruptcy.
Tip
- Here is an article on the new
bankruptcy requirements you must meet in order
to file, read it so if you pull this trick, you sound
knowledgeable)
If the creditor believes that you are about to file
for bankruptcy, they will often be more than willing
to settle for anything they can before you file and
they loose all hope of ever getting anything out of
you. But proceed with caution if you acquire any more
debt after telling a creditor this. Then you may not
be able to get rid of this debt should you file for
bankruptcy.
If the process seems a little difficult for you to
handle or you feel that you would be eaten for breakfast
by a hungry credit agency, you maybe right. You can
either:
A. If you have a trusted family
member that is good at negotiating you may ask them
for help. Keep in mind, some companies will not speak
with them unless you fax them a power of attorney
letter stating your friend or family member has the
authority to speak for you.
or
B. There are options available for
dealing with these agencies. A debt negotiation company
can provide you with advice and they can negotiate
settlements with the agency for you. The Debt negotiation
company will help you set up a savings fund to start
collecting money to pay your debts. They can also
help shed some light on how to begin living a debt
free life.
Bio: Ezcreditrepairsolutions.com is a site dedicated
to helping people interested in improving the credit
on their own without the aide of a credit repair agency.
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2006 Ezcreditrepairsolutions.com
