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Amy Nickson On 18th Jul,19
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Tips to save money while settling debts
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Debt settlement is an efficient approach by which you need to pay a fraction of your debt amount. It is a convenient way with which you can get rid of huge debt within a very short time. Your outstanding balance can be reduced by 40-60% of the debt you need to pay.

However, the process of negotiation with the creditors or debt collection agency is not easy. You have to do the work strategically to get success.

Many people prefer to enroll in a debt settlement program to settle their debts successfully. The company negotiates on their behalf with creditors so that the debts get cleared up soon.

However, you can settle your debts on your own. Though the negotiation process is difficult, you can manage it by following some strategies.

What is Do it yourself (DIY) debt settlement?

The main reason why “do it yourself” is a very convenient method of debt settlement is that you can settle your debts in your own way. If you take help from the professionals for debt settlement, they charge you a certain amount of money for the services that they offer you. But do it yourself debt settlement (DIY) helps you to save this little amount of money, which helps you to settle your debts on your own without enrolling in a debt relief program.

Below are some tips on how to negotiate with collection agencies or creditors for the best debt settlement deal.

How to negotiate with your creditors

There are various ways you can negotiate with your creditors to pay off your debts properly.
Here you go:

1. Verify debt

When you negotiate with a creditor or collection agency for your credit card debt, you should first have a copy of your own credit report. This report may help you to get a clear idea of what your debt amount is and how the debt affects your credit report. Ask the creditor to verify the debt to know how much you owe.

2. Approach the creditor for settlement

The creditors may negotiate with you for the debt only when they think that you may not pay off the debts that you have already taken. If you don’t make debt payments for six months or more than that, the creditors may sell your debt to the collection agencies. If you didn’t make monthly payments for a long time, then the collection agency can harass you by calling you again and again. Thus, you should initiate the negotiation for settlement with your creditors or collection agencies as soon as possible.

3. Make an offer

In a settlement, usually, you need to repay 30-50% of the total debt amount. Generally, the creditors accept a lump sum payment of money, which gets accumulated in the settlement account but in some cases, they may accept payment plan if you cannot pay your debt in full. Remember, the debt settlement plan should be made in writing.

4. Talk about debt settlement in person

Don’t initiate the settlement process over the phone with the debt collectors when it comes to settling debts. Even if you have to talk to them over the phone, make sure you note down the time and the name of the person you’ve talked to. Keep the records of each and every conversation and follow up by sending letters.

5. Keep patience while negotiating

You should always maintain patience while negotiating with collection agencies for debt settlement. Do not lose your temper. If required, you can inform them that if they don’t agree on a reduced payoff amount, then you may have to file a bankruptcy. They may agree on settlement as they may get nothing if you file bankruptcy.

6. Do not show your eagerness to settle

It may happen that you want to settle the debts fast since you want to buy a property. However, you may not get the best deal if you show your eagerness to settle the debts fast. Usually, the collectors do not agree on the first proposal you make. You have to continue negotiating and making them understand about your financial hardship so that they agree on a reduced payoff amount.

7. Get everything in writing

You will make a big mistake if you start making payments without having a written agreement where the terms and conditions are mentioned in detail. So, do not rely on verbal promises; always insist on having a written agreement. Go through the terms carefully and then make payments as per the amount agreed upon to.

Lastly, make sure you send all letters through certified mail with return receipt requests. Keep records of all communication so that you can produce them in the future if required. While negotiating with the collectors for debt settlement, make sure you negotiate for the removal of negative statements from your reports. If required, you can request to remove the negative statements, as a part of the settlement process. Negotiate with collectors to update the account statuses as “Paid in full” instead of “Paid as settled”. It will be favorable for your credit score.

Last Updated on: Thu, 18 Jul 2019

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