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. Full reprint rights are given IF,
bio and link back to ezcreditrepairsolutions.com
are left in tact and the link is active. Copyright 2006
Ezcreditrepairsolutions.com
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