Several mental and logical preparations actually make you ready to talk to your creditors for settling the debt. While debt settlement can be done in many ways, not all the ways work well for everyone. One very well proven way to settle debt is debt consolidation. But that too works on conditions. To get through consolidation, you need to have sound or healthy credit scores to get a consolidation loan. And there again, you must have concrete financial plans to pay back the debt consolidation loan on time without missing any payment or without delays. Then only this solution would work for you. Else, in case, you know you won’t be able to get the consolidation loan, or won’t have the money each month to pay back the loan EMI, you better take another smart route, and that is to settle the debt with the creditor.
Debt settlement with negotiation
This will surely take time and would make you pass through several rounds of conversations, and no doubt many unpleasant conversations too. However, you will still get a result from rounds of talk. And the negotiations would enable you to pay a much lower amount towards settling the debt than you actually owe. That is why you must try a debt settlement, either on your own, or by taking help of financial advisors, or through debt management experts. Here are some tips to help you talk and plan through the process of negotiation.
Anticipate to get many calls from creditors
You would be getting too many calls from creditors. Some calls may be directly from the creditor while many calls would be made by third parties whom creditors hire to collect the amount from you in any way. Whatever it is, you always have the scope to talk, start a conversation that is meaningful, and explain your situation. And in the process, there are a few smart and logical steps you should take. Learn about them here.
Calculate how much you can pay back
It depends totally on your calculation that which amount you would negotiate for. There is no point talking about an amount which is too high for you even to arrange. Hence you must know your limitations and how much you can afford finally to settle the loan. For this, you will have to review your finances and do the homework prior to talking to the creditor for debt settlement. Once you agree to pay a full and final settlement amount in one go, or agree to pay a reviewed and freshly settled amount in EMIs, you will then have to stick to the commitment, or else you would be in serious trouble.
Try to deal with the creditor directly
It’s good to talk directly to the creditor instead of going through collection agents.Collection agents and centers are given the job to collect the amount from you, and when they do it, it’s shown on the credit records as being recovered from you. This puts a negative impact on the credit history record and affects your credit score all the more. To avoid this negative impact, and save reputation you must avoid talking for the settlement to the collection agents. Rather you must directly contact the creditor, and tell them your situation.
Debt settlements must always be recorded
It’s vital that you get any settlement achieved in writing from the creditor. If settlements are not written and recorded with the consent of both parties, then things may turn unstable and ugly in the future sometimes. There have been many cases where debtors thought they settled the loan after a negotiation, while they were chased constantly by the creditors, years after the settlement for the same loan. That is why a full and final settlement agreement and settlement declaration from both parties with their consent must be made in writing. This can legally save you from any trouble in the future.
Make sure during settlement that your past penalties are resolved
It’s in the hands of the creditor to waive off all penalties and late payments and missed payments. If they do not waive them off, then they are going to show on your credit records for the next seven years, and will continually affect the score. Even when you try to improve your credit score with better practices, the past records of old penalties that were not paid will continue to act as friction against the better score building efforts. Hence, you must come with a settlement with your creditor to waive off those records and penalties as well, and to settle the debt in every possible way fully and finally. No unpaid amount, record, or penalty against your name must linger on against that loan account towards that creditor.
You should check for professional help
Settling debt is not everyone’s cup of tea. That’s because this takes you through a rigorous process of negotiations, heated or disturbed conversations, discussions of terms and clauses and many such things. This again happens in many rounds until the final settlement is achieved. And the whole process needs to be tackled in a sorted cool mind so that you do not fall again in another financial trap. That is why if you have any little doubt about your negotiating capabilities or convincing powers, then you better take professional help from a good debt settlement company, agent, or advisor. You may look for such professional help online. Before you finalize a deal with any such service, do find out their debt settlement ratings, which shows how successful they had been so far in settling debts of their customers.
You should also know that debt settlement definitely sets you free from the liability forever, but does not leave your track record clean. Your credit history would reflect the settlement, and the credit score would be affected by the fact that you finally paid a sum to settle which is lesser than what you originally owed. Once you settle with the debt, you must get involved in debts in the future only when you are 100% sure that you can return. And any such positive effort would improve your credit score with time.