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What is Debt Settlement?
Debt negotiation, also known as debt settlement, is the process of negotiating with your creditors to either establish a new payment schedule at a reduced interest rate, or allow you to make a lump sum payment that’s significantly lower than the total balance. If your only other option is bankruptcy, your creditors may be willing to negotiate with you to ensure that they get something rather than nothing. If you default on your loan they won’t get a dime, so it’s in their best interest to work with you.
Things to Remember When You Negotiate
Whether you negotiate with creditors on your own, or you hire a debt negotiation service, keep the following things in mind:- Be realistic about the amount you can afford to pay. This is often 40-60% of the total amount of the debts you owe. Low-ball offers will be rejected immediately.
- Creditors aren’t required to negotiate. They often will if the next option is bankruptcy, but don’t expect them to make it easy for you.
- Negotiation is a process. You will need to make a case for why they should consider you qualified for debt relief. Expect them to make a counter-offer and counter-arguments.
- You’re negotiating with a real person, and they will be sympathetic to your problems. Explain your situation without becoming too emotional.
- Your job is to convince them that you deserve to have your debts negotiated. Their job is to convince you to pay more money. The goal is to come to an agreement that benefits you both.
Negotiating debt is difficult and scary for most people but it can be done. If you don’t succeed on your own hire a professional to do it for you. There is help for you to get out of debt.
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