What not to do in debt settlement negotiations include not telling creditors information on why people can’t pay. Although this may sound harsh, creditors don’t care and won’t be persuaded to give people the best debt settlement deals. Instead, people wanting to repay their debt should employ smart strategies such as not accepting that they owe the debt. People should always demand copies of contracts with their signature, according to the Oak View Law Group.
Creditors often tell people information that isn’t true such as they can take their homes to repay unsecured debt or if they don’t pay now they won’t have another opportunity. Typically, these tactics are used to cause panic and fear in people who want to repay their debt.
People often think they should cancel debt such as credit cards before negotiating settlement repayments. The opposite is true. Open accounts provide people with more negotiating power. Since people with open accounts are still creditors’ customers, the creditors may agree to lower settlement payments.
It’s vital for people to obtain all agreements in writing. Written negotiations provide people with documentation they may need later—say if creditors try to sue for already paid debts. Besides, people negotiating with companies by deal with multiple company representatives. So, it’s best to keep records.
Creditors may suggest people repay the amount they owe in postdated checks or automatic bank debits. Don’t do it. Once creditors have access to people’s bank accounts they may keep automatically withdrawing payments out of the account after the debt is paid.
People must include the words “paid in full” on their final or lump sum payment. These three words protect people against creditors seeking additional payments. Once creditors cash the payment, they agree it’s the last payment. Also, send the last payment by certified mail. This ensures creditors received the payment.
One of the goals of negotiating debt settlements for people includes cleaning up their credit history. Just because people make payments, doesn’t mean creditors will indicate that on their credit reports. Thus, people should request and receive—in writing—that creditors will indicate the debt has been paid in full. Often creditors list debts as paid in settlement. Potential creditors may not view the term paid in settlement favorable when deciding whether to grant credit.