Common mistakes of debt negotiations can be the difference between additional debt and paying a lower sum of money. However, when people avoid making these mistakes they can successful eliminate their debt and save money. For instance, don’t make the common mistake of not getting the negotiated agreement in writing. Yes, verbal agreements are valid in court. However, the verbal agreement you made when one collection agency representative may not be binding with a different representative who demands you pay more than the previously negotiated sum.
Sometimes creditors or debt collection agencies contact people about an outstanding debt that people may not owe. Often times, people either commit to making payments to eliminate the debt without making sure they actually owe the money. Thus, when creditors contact you about a debt, request a debt validation letter. The creditor must send the letter and include information about the original creditor, the exact amount of the debt and other relevant information. If the information differs from the information people have, they should dispute the debt before starting negotiations.
People shouldn’t make the common mistake in thinking they have to pay the original amount. Creditors will negotiate for a lower sum of money to eliminate the debt. This is especially true for third-party debt collectors who work on commission.
A common mistake of debt negotiations is agreeing to monthly payments instead of one lump sum payment. People who miss payments default on the negotiated agreement and have to pay more money such as late fees.
Although agreeing to pay a negotiated debt payment through automatic bank account withdrawals or postdated checks sound like good options, they aren’t. Some creditors or debt collection agencies may continue automatically withdrawing money from bank accounts after the debt is paid. Or they can deposit the postdated checks early and cause people new debt with bank overdraft fees. Instead pay the creditors by check or money order and send it certified mail. Make sure to write paid in full on the check when paying a lump sum amount or—if you have to—the last monthly payment. The term paid in full prohibits creditors from trying to collect the debt again. Also, keep copies of the check for your records.