Negotiating a Settlement With a Debt Collector

Negotiating a settlement with a debt collector can be done, if you do your homework and have the time, patience and temerity to see it all the way through. Be apprised though, it’s an uphill proposition with many nuances of which you’ll need to be aware to make it work out in your favor.

This is why many people enlist the services of a debt relief firm such as Freedom Debt Relief to work on their behalf.

Here’s how they go about it.

Understand the Nature of the Debt

A good debt negotiator will take the time to comprehend the landscape of your circumstances before making any recommendations. The key bits of information they need are the name of the creditor, the amount owed and whether the debt is secured or unsecured.

Secured debt is pretty much negotiation-proof because the lender will simply repossess the property offered as collateral. The same is true for certain types of student debt as well. While public student loans are negotiation proof, some private loans can be dealt with in this manner.

Another circumstance of which to be aware is whether the statute of limitations has passed on the debt. You could inadvertently reanimate it and open yourself up for legal action if it has.

Develop a Settlement Plan

With a handle on the type of debt and the amounts owed, a plan for repaying your debts can be made. It’s important to know how much you can afford to put toward this each month by reviewing your budget and taking all of your expenses into consideration. You’ll also need to come with an idea of how much you’re willing to pay to achieve debt relief and be prepared to remit that amount in a single disbursement.

Debt relief firms get around this by gathering monthly payments in an escrow account until enough cash has accrued to satisfy an agreement. This means your creditors won’t be getting paid while the fund is building up, so you’ll need to be ready to field collection calls and threats of legal action.

A professional negotiator will explain the situation and how to get “relief” from these calls. You have the right to tell creditors to stop calling you by submitting a formal letter asking them to refrain from doing so.

Contact Your Creditors — Each in Turn

Having figured out what you can afford to do and a rough time frame within which you’ll do it, you’ll be ready to get in touch with your creditors to see what you can work out.

Professional negotiators explain the situation and try to reach agreements with creditors based upon your capability to follow through. It’s important to be absolutely certain you can meet the agreed-upon parameters, lest you find yourself in a worse situation having defaulted on an arrangement.

As agreements are reached, record them in writing in case the person with whom you reached the understanding leaves the company before your deal is seen through to completion.

Keep in mind; you’ll need to do this for each creditor.

You should also understand there are no guarantees. Debt collectors review each circumstance on a case-by-case basis. What worked for one person might be unworkable for you. The only way you’ll know for sure is to go through the process and get the result.

These are the broad strokes of negotiating a settlement with a debt collector. Much has been written on the subject to help you through the fine points as well. The main thing to know is it’s a difficult thing to do on your own. You’ll need a lot of time, patience and resolve, which is why many people hire a debt relief firm to work on their behalf.