Advice on Debt Settlement
Determine Which Debts Can Be Settled
- Unsecured debts are easiest to settle as the creditor has no collateral that they can recover in lieu of payment on the debt. Unsecured debts are things like credit cards, medical bills and utility bills, as opposed to secured debts such as your mortgage, which is supported by your home as collateral.
- Once you have identified creditors that may be willing to consider settling your debt for less than you owe, you can contact the creditors and make an offer. When determining what you are going to offer, consider that collections companies normally recover pennies on the dollar for credit card companies. Consider offering a creditor 25 percent of what you owe them, and negotiate from there.
Get The Agreement in Writing
- If you are able to reach an agreement with a creditor, do not make any payments on the agreement until you see it in writing. It is important to be sure that you have a deal before you make payments that may limit your ability to remain current on the debt should the deal fall through.
- If you are unable to reach an agreement immediately, be patient. As time goes by the creditors will become more anxious to settle rather than writing off the debt. Keep track of your contacts with the companies, including who you spoke to, what the results were and whether there was anything you could do to facilitate a settlement. Stay in contact and keep records of everything.