One of the major drawbacks of debt settlements is that your accounts probably have to become delinquent before your creditors will consider settling them. As long as your accounts are current creditors probably won’t think twice about giving you a debt settlement. They might even tell you that settlement isn’t an option. That would be because they really have no incentive to settle an account that’s being paid on time. However, when your account is delinquent and in danger of not being collected, the creditor might want to recoup as much of your balance as possible, even if it means accepting less than what’s owed.
If you decide you want to go the debt settlement route, then you’ll probably have to stop paying your credit cards and other debts. You should only stop paying the debts you plan to settle and keep up your monthly payments on all the accounts that you don’t intend to settle. When your creditors don’t receive payment from you, they’ll probably start taking actions to convince you to make payment on your account. If you’re not ready for this process, it could be overwhelming and you might end up doing something that could hurt your ability to settle your account.
30 Days Past Due
Your creditors may begin calling you or send a reminder to make payment on your account. This initial reminder will probably be friendly – just a gentle nudge to get you to send your payment in soon. Even at 60 days past due, the creditor will probably be fairly easy on you regarding your payments. They most likely just want you to get caught up again.
90 Days Past Due
Once your account gets 90 days past due, it’s usually considered seriously delinquent. Contacts from your creditors will usually get more serious in tone. Letters and voice messages may sound a little threatening. Creditors can be more aggressive at this point because they realize it’s only a matter of time before they will have to charge-off your account.
120-150 Days Past Due
Letters will probably continue to get more serious, but at this point you may receive a settlement offer from some of your creditors. If you get one of these offer letters and you have enough money to settle the account, now may be a good time to call your creditor to negotiate. Settling your accounts before they reach 180 days past due will let you avoid a charge-off on your credit report.
Once an account is declared by a creditor as charged-off, it will typically be sold to a collection agency. The tone of calls and letters from debt collectors vary from collection agency to collection agency and even among individual collectors at an agency. Some collectors are friendly, others are very aggressive, and you may have to deal with both of them.
If your creditors and debt collectors have your correct phone number, you might be bombarded with phone calls once your account gets 30 days past due. It is typical to get several phone calls a day for each of your delinquent accounts. You could ease the stress of dealing with these phone calls by coming up with a screening system that sends the calls directly to voice mail.