By financen | December 9, 2013 - 4:52 pm - Posted in Debt, Debt settlement program

Debt collectors are tough, seasoned professionals and they are well trained in collecting consumer debts. When you are getting regular collection calls from the different debt collectors, you need to be well prepared on how to tackle the situation and negotiate with them for a settlement amount. These collectors are talking with many people on a daily basis and they are used to hear the common reasons given by other debts, so you need to give a very convincing logic while you initiate negotiations with them.



Before starting your negotiations with the debt collectors, you need to study your sources of income, savings and the amount of your debt and how much of it can you afford to repay. Also you need to look at your current expenses and see which bills are most unavoidable and needs to be paid, while allocating the amount for repayment. You can go through your credit report provided by the credit bureaus and check for any inaccuracies or outdated information. Incorrect information on your credit report will hurt your credit scores, so get it fixed at your earliest. You should be aware about your rights as a debtor by going through the debt collection fair practices act. It will make you as an informed consumer, and if any collection agency is violating the federal or state laws, you can take immediate actions against them using the laws as your legal weapon against them.

When you start a negotiation with a creditor, start with the lowest amount and then you can increase it, as and when required. You can start with a settlement offer of 40% of your original debt, and explain them about your situation why you had fallen behind in your payments in the past and other things that forced you to get into a situation like this in the present. Do not give out your personal information like your place of work, name and address of your bank and your banking details. While talking with these people, stay calm and focused and be polite during your conversations.

It is a good idea to tell the creditors that you are recording the conversations for future proof. This will keep them in the best of their behavior. You must maintain a creditor call log and put details about every person you speak with from that company with date and time. During the negotiation process, you can ask the creditor to remove any negative information reported by them to the credit bureaus and insist them to do a fair reporting on your credit report.

Once the settlement amount is finalized, you must ask for the settlement proposal in writing with details on the new amount agreed on, new terms of the repayment, as well as any other terms agreed by both of you. Keep the information in your file for future records. Do not make any sort of payment until you have proof of the settlement offer in writing.

Debt settlement is a legitimate alternative to filing bankruptcy. If anyone is going through serious financial hardship and has overwhelming debts on their heads, it is time to get professional help.

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