When negotiating with creditors on a debt settlement plan, it is important to keep certain things in mind. Your debt negotiation tactics will help determine whether your creditors will decide if it is prudent to settle your debt for less than you currently owe, and it can be tempting to paint your finances in the worst possible light in order to make it seem as though you simply cannot repay the debt. But you may be surprised that debt settlement works best when you are candid about your situation.
Strategies That Work
One basic fact of debt negotiation is that creditors are more likely to reach a debt settlement plan with someone who they believe is truly unable to repay the full amount of the loan, and particularly if that person is in demonstrable financial distress. Some people take this to mean that purposefully falling behind on payments to creditors is a good strategy for debt negotiation, but this tactic does not often bear fruit. The creditor will take a comprehensive look at your finances before agreeing to a settlement, and if they determine that you are able to make payments but have not been, they will not only not agree to a debt settlement, but may charge additional penalties for the initial failure to pay.
The best debt settlement strategies involve being honest with the creditor about your financial difficulties. If you are truly unable to make the payments and the creditor may face the prospect of not getting any of their money back, they will be much more likely to enter debt negotiation and much more likely to reach a settlement.