Things To Remember While Negotiating A Debt Settlement

This is a guest post by David Brown, a financial writer with Oak View Law Group. He writes on debt related topics and offers advice on such issues.

If your debts have spiraled out of control then you can indeed feel lost. High interest rates, fees, late payment penalties start kicking in and it becomes difficult for you to make even minimum monthly payments. That is when debt settlement programs can come to your rescue. However, negotiating debt settlement can be a tricky proposition. So read on to make sure that you know some crucial things before dealing with your creditors.

• Your primary task is to find out the right person to negotiate with. Not all people from the lending company are equally cooperative. Don’t be discouraged if you initially stumble upon someone who is difficult to deal with. Try to avoid that person and approach someone more helpful.It is important for you to understand that all your hopes of settling the debt can be ruined if you have to negotiate with the wrong person.
• Be ready for a tough time. Your lenders will certainly not enjoy receiving a much reduced sum of money. So you have fight hard to settle your debt. Do not panic, keep your cool, show some perseverence and strength of character to succeed. Your creditors have the legal rights to call you till the debt is settled. That you also need to tolerate intimidating creditor calls during this period.
• If your lenders refuse to settle your debt then tell them that you are considering bankruptcy. If you become bankrupt then they risk losing everything. Being wise people, they will consider accepting less money than nothing at all.
• Your creditors may threaten to sue you. Is it a false threat? Well, most of the time they bluff. Taking you to court involves a lot of money and time which they can hardly afford. On the other hand, some companies may actually do what they say. To stay on the safe side do some research on your creditors to find out how they work.
• Don’t negotiate to get your debt reduced by an incredible amount. If you do so you may not get your debt settled at all. Usually a 50% reduction is fair enough. A few companies would settle for an even lower amount. If you decide to take a risk by negotiating for such an offer make efforts to find out whether your creditor accepts such settlement offers.
• Debt settlement affects your credit report quite badly. So demand to the creditors to remove the negative statements like “settled in full” from the report. They can, of course, refuse to oblize but ask for it. You will have the advantage of a clean credit report if they yield.
• Verbal deals have no value at all. So whatever advatage you gain by negotiations are to be written down and keep a copy of every document.
• If the negotiation goes on for more than two years then better consider bankruptcy. Statistical records reveal that if negotiations go on for more than 24 months then debt does not get settled in most cases. Moreover, the interest on the outstanding amount keeps accumulating together with late fees and debt settlement no longer remains a viable option.
• If you are apprehensive about your negotiating abilities then you can hire a debt settlement company. They have expert negotiators who can deal well with situations like this.

Negotiating debt settlement is definitely a better option than bankruptcy. But it is important to know the rules of the game before you play it. So keep in mind the above points to negotiate smartly with your lenders.