Debt Negotiation Tips & Debt Settlement Fees

Tips to negotiate your bills for less than you owe.

When you are ready to use debt negotiation to settle your debts, our recommendation, when contacting your creditors, is to contact them by telephone, or in person, first.

Keep in mind that some creditors will be less likely to negotiate a settlement if you are not behind in your payments. However, if they understand the depth of financial distress you are in, they may be willing to at least explore settlement in order to avoid losing out entirely.

Always be professional, courteous and non-threatening. The majority of creditors will respect your desire to pay your debts, and appreciate your active enlistment of their help.

Debt negotiation and settlement can affect your credit rating, at least temporarily, so don't attempt debt negotiation unless you are willing to risk this.

Once you have contacted a creditor, and made arrangements to payoff a debt via settlement, send a letter to the creditor. The letter should outline your agreement, who you spoke with, and enclosing payment in full. You should always mark the check, money order, etc., as “payment in full of account number ______ as per agreement with _________ on (date)________." Be sure and fill in the blanks with the information appropriate for your debt and creditor. Always keep a copy of the letter for your own records.

Debt Negotiation Specialists & Their Fees

There are two basic ways a professional debt negotiator, or arbitrator may charge fees and an equal number of ways that you would be paying them:

• percentage of savings on principal; or
• percentage of debt submitted for negotiation.

Obviously, the percentage on the first calculation would be higher than the percentage on debt submitted. If you get quotes from different debt negotiation specialists, be sure and ask exactly how the fee is calculated, then compare.

Fees are also paid in different ways. One way they are not commonly paid is over the length of your contract with the debt settlement company. Usually, the fee payments are taken as follows:

• up front, or from the first couple payments you make
• a percentage of the monthly fee during the first year

The state you live in, and the laws they require a professional debt negotiator, or arbitrator to follow, will have a lot to do with how your payments are calculated and paid.

Obviously, the longer you can spread the fees over time, the better it is for you, but also consider the incentive the negotiator has to handle your account in your best interests, not theirs. If the fee is based upon the amount of savings you get (instead of the amount of debt you have), you can come out much further ahead in money and time.

We recommend you fill out the simple form here for debt settlement services so they can negotiate payoffs for all your unsecured debts, which include judgments, often settling for pennies on the dollar. Regardless of what stage of collections a debt is in, they will negotiate on your behalf.






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