When you have nothing to lose, debt settlement can take on the colors of a poker table. It would be unwise to suggest you behave carelessly or recklessly with banks and lenders, but you have rights and options that, if exploited properly, can get you out of unsettled debts.
If your debt is old, you may want to ask that the bill collector validate the debt. The bill collector will have to collect and file paperwork that verifies the amount you owe, the original and that you, in fact, owe it. If they fail to do so, you are off the hook.
Even if you aren’t looking to avoid repaying outstanding debt, debt validation is a way of certifying what you owe. If you are presented with a number that seems completely inflated, it is within your rights to have that debt validated.
It isn’t uncommon for banks and bill collectors to improperly file debt records. It is their responsibility to accurately report on your credit history. The onus is theirs if they can’t properly file the paperwork. Debt validation is a great strategy for old, dubious debt. However, if you are in negotiations with an original lender, don’t try it—they will most certainly have the original paperwork.
What if they have the paperwork?
Lenders and bill collectors won’t be happy if they have the paperwork and you unreasonably pursued the debt validation option. You want to start changing the tone of the conversation immediately. Shift the conversation to one of debt negotiation. If you know you can’t possibly pay back, in full, the debt you owe, you will want to seek the help of a professional arbitrator to have that debt reduced. If you can repay it, ask about a payment plan that is equitable for both you and your lender.