When you settle debts on your own, without the help of a third-party settlement company, it’s up to you to negotiate the settlements. Confidence may play a major role in many successful negotiations. Knowing what to say may be another big component. When you’re talking to your creditors, you should follow these tips to possibly talk your way into a settlement offer that meets your budget.
Wait until the right time.
This may be the most important rule in negotiating a debt settlement. If you approach debt settlement at the wrong time, not only could your offer be turned down, the creditor could turn your debt over to a collection attorney since they know your intent is to settle the account. In general, 90 days past due is a good time to mention settlement. You can wait another 30 days if it makes you feel more comfortable.
Gauge the creditor’s interest in settling the account.
When you’re dealing with the original creditor, it’s probably a good idea to feel out their willingness to settle the account before you make an offer. For example, you might say something like, “I may be able to get enough money to settle the account. Would you be interested in something like that?” You may get a variety of answers. Some creditors might say they don’t settle accounts. Other creditors may extend an offer. And others may ask you to make an offer.
Deal in amounts not percentages.
If you mention percentages, you might sound too versed in the debt settlement area. It may appear as though you’ve been considering settlement all along. It could be better if the creditor thinks you only have access to a certain amount of money and that’s all you can pay. So, when you make your first settlement offer, you should mention the amount you’ve saved up to settle that account. When the creditor mentions a percentage, it is probably then ok for you to start talking in percentages.
Make a counteroffer, if necessary.
Often, when creditors put an offer on the table, it’s not the lowest amount they’re willing to take. If the creditor’s offer is 70% or 80% of the balance due and you’re not prepared to pay that, then make a counteroffer for possibly 40% or 50%. Making a lower offer can give you room to meet in the middle. If the creditor won’t budge and you still have time before the account goes to charge-off after being 180 days late, then you could wait another 30 days. If it gets down to the wire, say day 170, and the creditor still isn’t budging, you’ll have to decide whether to take the offer or let the account be charged off and sent to a collection agency.
Only offer what you can afford to pay.
If the creditor accepts your settlement offer, then you need to be ready to make payment on the offer within a few days. The offer may have an expiration date on it and if so, then you’ll have to make payment by that date to take the settlement offer.
Settling your own debts may be scary at first, but as you talk to your creditors, you might gain experience and confidence that could make it easier each time.