How To Negotiate A Debt Settlement

If you find yourself drowning in debt there are ways to get relief. Learn how you can negotiate a debt settlement with your creditors. Let's start off with talking about what kinds of debts you can negotiate and settle.

Any unsecured debt can go through a negotiation process and be settled for less than the full amount. This includes credit card debt, department stored cards, unsecured loans, personal loans such as payday loans, lines of credit, medical bills, auto loan collections and repossessions and even business debt. In some instances you can even settle second mortgage obligations and home equity lines of credit. This does not mean all your creditors will agree to your attempts to settle a debt though.

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You cannot go to jail for not paying off these debts. You can be hounded day and night by debt collectors when you fail to make on time payments.

This is where learning how to negotiate with debt collectors can help you. Or you can enlist credit card debt settlement services that can do it on your behalf.

How To Negotiate With Debt Collectors

You will notice that when you pay all your bills on time your creditors are not very willing to work with you - reduce your monthly payment, lower your interest rate, waive late fees, over the limit fees, etc. They will tell you they do not offer hardship programs. But something magical happens when you start to fall behind on your bills.

They will have all sorts of options to help you when you miss a few payments. They will eagerly lower your payment, waive fees, and reduce your interest rates.

If you are going through a temporary financial hardship these reduced payments can help you keep your head above water. But it's when you are facing a long term downturn in your finances that you could use some debt negotiation advice.

Do It Yourself Debt Negotiation

This is when you need to learn the secrets to do it yourself debt negotiation debt settlement.

When you miss 4, 5, or even 6 of your credit card payments, you will have the opportunity to negotiate with your creditors and get debt settlement letters from them offering to eliminate your entire balance for a lump sum amount.

In many cases you can get a 50% reduction of your unsecured debt. If you owe $10,000 to Bank Of America, Chase, Citigroup, or Discover Card for example, they would negotiate a debt settlement of $5,000.

This is a good offer provided you can come up with the $5,000 in time to make the lump sum payment.

Negotiate A Good Debt Settlement Offer

Don't forget this is a debt negotiation. You negotiate just like you would for a car. They make an offer then you counter with your offer and you keep going back and forth until you get the lowest "price."

A 50% debt negotiation offer is good, but a 25% or 35% is even better. You want to wait until the creditors are desperate to keep your account from being written off as a bad debt to accept their final debt settlement offers.

The best news is that you can do all of this through the phone, fax, and mail. You don't have to see anybody. You don't have to meet anyone face to face. This way you can avoid confrontations.

Debt Negotiation For Credit Cards, Medical Bills, Auto Loans?

You can negotiate your credit cards, medical bills and even your auto loans that have gone into repossession this way. You can get an auto loan debt settlement when your car has already been repossessed and there is still a balance remaining on your account after the car has been auctioned off. You can negotiate and make them an offer to forgive the remaining balance.

When you compare debt negotiation vs credit counseling you will see that negotiation and settlement offer more benefits that credit counseling. You are getting credit card debt forgiveness and not just a lower monthly payment or reduced interest rate. Your entire outstanding balance is being reduced and wiped out. With credit counseling you enroll in a repayment program that can last up to 48 months. When you negotiate a debt settlement, you can get your credit card balances wiped out in as little as 12 months.

Drawbacks Of Debt Negotiation

There are some drawbacks to debt negotiation and debt settlement. You will still get the phone calls at home, at work, and possibly even to your neighbors and relatives from debt collectors. You can explain to your friends, family, neighbors and coworkers your situation. They are probably going through a similar finanical situation as you anyways.

Your credit score will also suffer greatly. But it's not the end of the world. You can quickly rebuild your credit score when you have no more credit card debt.

The last thing to keep in mind with negotiating your debt settlement offers is that you have to have the money saved up to make those lump sum payments when your credit card companies agree to your settlement offers. You can borrow from friends and family or a whole life insurance policy for example.

My Experiences Negotiating Debt Settlements

From my experience it is not easy making that first phone call to your credit card companies explaining your financial hardship - medical bills, student loans, IRS taxes, drop in income or job loss - but it helps if you have a sample script in front of you to make sure you say all you need to say. But after those first few calls it gets easier and once you get to the 90 day past due date, you can begin to negotiate a debt settlement with your creditors. You may even find some debt settlement letters in the mail the further behind you fall on your bills.

Debt negotiation and debt settlement is not for everyone. Every situation is unique. Not all creditors will agree to a debt negotiation offer either. Most of them will though. You have to be persistent and do your best not to accept their first offer because that is usually not their best offer.

Hopefully this can help you negotiate a debt settlement with your creditors and I wish you the best of luck.