One of the most popular ways of dealing with unpaid debt is via debt settlement. There are numerous debt settlement companies out there that are willing to help you in negotiating with your creditors for settling your debt. However, these companies usually demand a fee for their services so individuals can choose to negotiate their own settlement as long as they know how.
Here are some steps that can help you in doing so:
1- The first thing that you need to do is to obtain a copy of your credit report . Individuals
can either get a copy of their report from the major credit reporting bureaus or get it online.
2- Once your have secured your credit reports, you need to go over them thoroughly for
ensuring that there aren’t any discrepancies and the reports only reflect accurate and true information. This will also help you in knowing whether your account is still with the original creditor or it has been sold over to a collection agency.
3- It is essential for you to have a plan before you actually make any contact with your creditors. You need to decide the percentage of the original debt that you are able to pay right now and also the maximum amount that you will be able to pay. You should know your first, second and third offer as well before you start negotiating. If you want to negotiate a payment plan for each month, you need to decide beforehand the actual amount you can pay. You should be prepared to make multiple offers because the every creditor will not settle for the same amount. It is best to start low and then make additional offers because the creditor is likely to reject the offer if it’s too low. A good starting point is usually 50%, but it can also depend on the creditor and the amount owed.
4- The process of debt settlement is slightly easier if you are dealing with the original creditor. However, the longer the debt remains unpaid; the chances of negotiating successfully are reduced. You should explain to the creditors how they will benefit from the arrangement. Try a couple of times before giving up on the negotiation.
5- A little more work is required in the case of a collection agency. These agencies are often more aggressive than the creditors and will try to get the most of the total debt. You should be aware of how validation of the debt has to be requested from the collection agency and also the statute of limitation on the debt.
6- Once a settlement agreement has been reached, you should first get the whole contract in writing before any money is paid. The statement should mention the new amount to be paid and the new terms of the agreement to ensure that the creditor doesn’t back out in the future.
7- You should keep track of your credit report and paperwork of the debt settlement agreement to ensure that the debt is being recorded correctly.