If you’ve been struggling with debt, you might have heard of a debt payoff solution called debt settlement. With debt settlement, you or a company working on your behalf negotiates with your creditors to forgive a portion of the balances you owe. While it may sound too good to be true, it is a proven solution that has helped millions achieve freedom from financial hardship.
At American Credit Card Solutions, we’ve been in the debt settlement game for over ten years—with hundreds of positive reviews from clients to show for it. To help you on your debt-free journey, we polled our expert debt specialists for their top insider tips for negotiating with creditors. Today we unveil our best-kept secrets to successful debt settlement.
Secret #1: Attempt to Settle Before Your Accounts Go into Collections
If your account is in a “gray area”—meaning you haven’t defaulted on it, but you also haven’t paid it in a few months—now is the time to act. It’s essential to begin the debt settlement process as soon as possible because, once your debt has defaulted, your creditor will typically write it off as a loss and sell your debt to collection agencies. Once this happens, your credit score will be hit twice: once for the original missed payments, and again for the debt going into collections.
Secret #2: Build a Strong Case Prior to Negotiations
Preparing to settle a debt is similar to preparing for a big test— you’ll want to make sure you know all the facts about your debt situation and can convey them in a convincing manner to make the grade! Before you try to settle your debts, review the details and history of your financial situation and plan out your negotiation strategy.
You’ll want to document your monthly income and expenses, including your debt payments, on an electronic spreadsheet or on paper. Make sure you have the original paperwork on hand to reference during both this planning period and when you’re in negotiations. As part of your debt negotiation strategy, be prepared to clearly explain to creditors why you’re behind on your payments and why your money has to go elsewhere each month. The more specific you are with the facts, the more likely creditors are to work with you.
Related Blog Post: How to Settle Debt on Your Own
Secret #3: Don’t Be Afraid to Haggle
Successful debt settlement is all about being able to negotiate well. The first secret of negotiation is that the first offer is often not the best. Don’t feel pressured by creditors or collectors to accept the first payment option they suggest. When starting negotiations, make sure you’re starting with the original balance owed as your baseline. It is common for collections agencies to artificially inflate the amount you owe by tacking on additional penalties and fees. That’s why it’s essential to know where you stand before negotiations get started (remember secret #2).
While some creditors or collectors may be willing to let you make monthly payments, you may have better luck when offering a discounted lump sum payment. Many receive a percentage of what they collect as an incentive, so they might be more willing to accept your offer of a larger amount upfront.
Secret #4: Get It All in Writing
You’ve prepared your case, negotiated down your debt, and now you’re ready to send your creditors your first payment. But wait! Do you have written proof of an agreement between you and your creditors? Make sure that you’ve received a signed letter laying out the terms of your settlement contract. This document should explicitly state that the creditor will accept your payment and that the resulting payout will absolve you of future financial and legal obligation for the debt. This protects you from being sued for the remainder of your debt or any other potential legal action a creditor may take.
Secret #5: Having a Trusted Partner Can Help You Save More
Unless you have years of experience dealing with and negotiating with creditors, chances are that the debt settlement process may feel overwhelming. While you can settle debts on your own, it may be beneficial to work with a team of debt specialists who can handle negotiations on your behalf. Not only do these individuals have years of experience and authority when dealing with creditors, but they also know how to manage your unique financial situation to ensure the best settlement outcome for you.
If you want an experienced debt negotiation partner on your side, look to ACCS. Our team of professional debt specialists has helped thousands to successfully reduce the amount of debt owed and pay off debt faster. Request a Free Debt Relief Evaluation today to learn more about what we can do for your financial situation.