Tips On Debt Negotiation

Tips on debt negotiation  won’t improve the chances of winning the negotiation battle. People must remember that creditors are not their best friends and nor do creditors have their best interest at heart. In fact, creditors are focused on one thing—obtaining the money owed. Thus, it’s important that people conduct smart negotiations to best the best settlement.

Do Homework Before Conducting Debt Negotiations with Creditors

Before negotiating a debt settlement people should know financial terminology. For instance, a creditor may tell you that he can take your home if you do not settle an outstanding credit card debt quickly. However, the creditor doesn’t have the upper hand if you know the difference between secured and unsecured debt. Only secured debt, where property is used as collateral, can be taken if you default on payments.

Also, people should know the laws regarding the statute of limitations in their state. A collection agency often contact people about debt incurred past the statute of limitations. Depending on state law, you won’t have to settle a claim which is considered an old debt.

Anyone planning to conduct debt negotiations must ensure that the creditor’s claim is valid. Often times creditors will sell the charged off debt to collection agencies which add their own fees on top of the debt. So you may originally owe—including late and penalties—$500.00. However, the collection agencies may claim you owe $1,300.00 after adding their fees. Thus, obtaining the original documents such as signed contracts or the last bill to know they correct amount they owe is important.

Don’t Conduct Negotiations over the Telephone

According to Oak View Law Group, it’s best to avoid telephone conversations with creditors unless people record the conversations and let the creditors know their being taped. Documented conversations or correspondence helps if debt negotiations fail and legal proceedings begin.

Set the Payment Schedule, not Creditors

Typically, people have a set amount of money they can afford to pay. Often creditors try to persuade them to deviate from that amount to make higher payments. If you know you can afford monthly payments of $50 then don’t agree to $100 a month. Of course, paying more eliminates the debt faster, but if you can’t make the payments then you’ll break the settlement agreement. On the final payment write “paid in full” which ensures creditors won’t try to recover the debt again.