Debt Settlement Negotiation Tips

May 6, 2012 by  Filed under: Loans 

Deciding to try debt settlement is a major financial decision for anyone who is struggling to pay their bills every month. While this process is a good way someone to avoid bankruptcy and/or reduce their debts to an affordable level, it is important to understand your options, as well as the potential consequences of debt settlement. There are a number of companies and lawyers that offer debt settlement services. Though it is not necessary to hire someone to settle your debts for you, many people choose to try to negotiate on their own, especially those with a fairly small amount of debt to pay off.

If you choose to try settlement on your own, you will probably start when it becomes somewhat difficult to pay the bills. Anyone who cannot make their minimum payments is definitely a candidate for this process, but settlement is not limited to people who are struggling with their bills. In fact, many people choose to do this simply because they want to reduce their total amount of debt they have. Begin by listing out all of the bills and debts you currently owe. Be sure to include your account numbers, total amount that you owe, minimum payment, and the interest rate. After compiling the list, make a notebook that has a section for each creditor. Negotiating can take multiple phone calls over a period of weeks or even months, making good organization skills a must.

Start by calling the first creditor on your list. Ask to speak to someone in the debt negotiation or settlement department. Often, banks will claim they do not have such as department in an effort to avoid your call, but it is important to be persistent. It may take several attempts to get to the right person. Once you reach the right person, explain your financial situation and ask them if they would be willing to accept a smaller payment. On your own, you can expect it to take several weeks for your offer to considered, then met with a counter offer. Write down the names of the people you speak to with every phone call in your notebook, as well as a brief summary of what was discussed.

Throughout the process, expect to keep track of a lot of paperwork. Most settlement departments will need proof of income or financial hardship, and practically every bank will have its own unique set of paperwork to fill out. In general, expect to spend about ten to thirty hours on the phone for
each creditor on your list.

Because of the time and hassle involved with negotiating on your own, many people choose to hire a debt settlement attorney to negotiate and settle debts on their behalf. Most of the professional debt settlement law firms will already have developed relationships with many of the major lenders and are experienced negotiators, familiar with the ins and outs of the debt settlement process. This means they may be able to generate faster and better results than you can by negotiating on your own.

A debt settlement attorney uses the protections found in state and federal consumer laws and extensive experience in consumer law in the credit and debt industries to offer a wide variety of affordable debt settlement solutions and other consumer financial legal problems.

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