In the ideal do-it-yourself debt settlement world, all your settlement offers would be accepted the first time around. Unfortunately, it doesn’t always work that way. It’s better to be prepared for a rejected settlement offer than to be completely caught off guard when a creditor says no.
Did you make the offer at the right time?
Timing is essential with settlement offers. If you make an offer too early, creditors will almost always tell you they don’t settle accounts. What is too early? Before 90 days after the account is past due is generally too soon to make a settlement offer. The exception is when the creditor approaches you with a settlement offer. Before 90 days you probably should let the creditor make the first move.
If you made your settlement offer after 90 days and it was rejected, the reason could still be due to timing. There are some creditors who don’t negotiate settlements until the account is 120 or 150 days past due. Even more nerve-racking are those creditors who only take settlement offers in the few days before charge-off, which occurs 180 days past due. When your offer is rejected between 90 and 120 days, then you could wait 30 days and make the offer again. However, if it’s past day 150, you might call again on day 170.
(When we mention days past due, we’ve started counting on the first day after your first missed payment was due. For example, if your first missed payment was due on March 1, the account became past due on March 2. That’s Day 1.)
Wait for the Debt Collector
If charge-off date is nearing and the creditor still won’t talk settlement, then it’s probably in your best interest to wait for the account to go to a collection agency. Settlement negotiations are often more successful with collection agencies because they’ve often taken on the debt for just a fraction of the total balance due.
When you can’t negotiate with one debt collector, you could wait a few months and the account will probably be passed to another collection agency. At some point possibly, the account will land in the hands of a collection agency that’s willing to work with you.
Should You Just Pay in Full?
Some debts never leave the original creditor’s office. The debt may be passed to the internal collection office, but it’s still then handled by the company who you first incurred the debt with. This might happen with bank overdrafts, for example. If the creditor isn’t willing to settle and the account hasn’t been sent to a collection agency, it may be better to pay the account in full if you can afford to do so.
Lawsuit is Pending
If you’re served with court documents for a lawsuit regarding the debt, you may want to talk to the creditor as quickly as possible to keep from going to court. You can still have negotiate with the creditor before the court date. If they don’t want to negotiate and you want to avoid having a judgment on your credit record, consider paying the account in full if you can afford to. Otherwise, you could try to ask the court to set up a repayment plan to make it easier to pay back the debt.
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