Debt settlement can be a harrowing process. Debt collectors aren’t known to be the most honest people, and they are trained to exploit your emotions and pressure you into paying as much as they can wring out of you. Keep your calm, develop a plan and you can prevail over debt collectors.
Build up your cash reserves
We have outlined it before: you need to have cash saved up before you approach a collector about a settlement. This is your leverage. You will want to hire the help of a negotiation expert such as a debt attorney, and you need to keep your savings a secret—especially if you have multiple creditors calling. Creditors don’t care if you owe anyone else money. They want theirs first and in full.
Get a settlement in writing
You absolutely need to have any finalized settlement deal in writing. The language needs to be clear and obvious. Any room for interpretation in a settlement contract can be exploited, and you could find creditors pursuing you later for the same loans. Don’t ever forfeit money on a verbal contract.
Major credit card companies won’t play ball
Many big credit card companies will allow for 10% debt reduction maximum. After this threshold you are looking at a lawsuit. At the same time, they are likely to send annoying and intimidating bill collectors after you.
Your credit score will take a huge hit before creditors will talk
Don’t bother trying to negotiate a debt settlement if you aren’t delinquent. You may feel overwhelmed, but creditors won’t talk to you until you are seriously behind on your payments. The most opportune time to engage in fruitful debt settlement talks is when you are three to four months late on your payments.