Debt Negotiation Tips & Debt Settlement Fees

Tips to negotiate your bills for less than you owe.

Debt negotiation time at hand? Our recommendation, when contacting your creditors, is to contact them via phone 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 settlement is very likely to have a negative impact on your credit score, 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, send a follow up letter. 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

The ways a debt settlement specialist will likely charge you:

  • percentage of savings on principal
  • percentage of debt submitted for negotiation.
  • flat rate per debt or per total debt
If you are talking with several settlement agencies, get the exact figures they will be charging (and how they are calculated) so you can compare apples to apples.

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.





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Debt negotiation tips for debt settlement.