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.
It is very common when you negotiate to settle debts with
a creditor, that creditor will close your account once payment is received
in full.
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.
Return to
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