Friday, June 08, 2018

7 Effective Ways to Use Debt Settlemnet

Approximately 43 million Americans have at least one account that is 90 days or more late. There are several methods that can be used to pay off a debt such as paying in installments, paying the debt in full or negotiating with the creditor or collection agency to offer a debt settlement. Apply for debt settlement if an account is more than 90 days late.  

Debt settlement is best used for unsecured debt such as: credit cards, medical bills, department store cards, student loans, personal loans or other small debt that have been reported to a collection agency.
Debt settlement can consist of offering a one-time payment or installment payment that is less than the full amount owed. The remaining debt owed is forgiven.

The advantages of a debt settlement are: it eliminates a monthly payment, puts you back in good standing with the company, and reduces the total amount of debt you owe, helps boost your credit score and helps you look more favorable to potential creditors and lenders.

The disadvantages of a debt settlement are: it may take months before an actual payment is applied to your debt, you may be subjected to legal action while waiting for a payment to be made on your account(s), using their service may be reported on your credit report which lowers your credit score, you will be required to participate in a payment plan for 3-5 years and will be required to pay a monthly fee plus setup or other fees. Here are 7 effective ways to negotiate a debt settlement.

  1. Contact information. Prior to negotiating log the person’s name, direct phone number, email address, and the name of the company. Avoid providing your home or work phone number or employer name.
  2. Negotiation type. Negotiate either over the phone or in writing. Keep accurate notes of what the representative says and everything you say.
  3. Negotiate. Don’t agree to the first offer. Don’t offer to pay more than 50% of the outstanding balance.
  4. Documentation. The company may ask for proof of income, assets or other debt owed to determine if you can the debt. Block out your bank account numbers, SSN, DOB, phone numbers and any other personal information when submitting documentation.
  5. Proof. If they have informed you they are recording your conversation, you can also record the conversation and inform them you are doing so. Request a debt settlement agreement confirmation letter.
  6. Don’t accept no. If your debt settlement offer is rejected consider asking the company to lower your interest rate, lower your monthly payment, and waive any late fees or other fees.
  7. Payment. Pay by money order or cashier’s check which is the safest method. Avoid paying by personal check.

1 comment:

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