Four Tips for Negotiating a Debt Settlement

Everyone takes on some form of debt at some point in their life. Unfortunately, it is not uncommon for people to take on too much debt and then find they are unable to repay it. If you are in this situation, you may be able to negotiate a debt settlement. This means negotiating with the creditor or debt collector to pay a lower amount than what you actually owe. Below, our Orlando debt settlement and relief attorney explains tips you need to know when heading into negotiations. 

 Determine if Settlement is a Good Option  

Before negotiating a debt settlement, you should determine if it is the best option for you. If credit counseling or bankruptcy are options, they can provide more reliable results and a faster recovery. Also, your debts should typically be delinquent to negotiate a settlement. Foreseeing that you will not be able to repay your debt is not usually enough. Most debt collectors and creditors will require a lump sum so it is important to determine if you will be able to pay this, as well. 

 Review the Details of the Debt  

When creditors and debt collectors contact borrowers about unpaid debt, or they start legal action such as filing a lawsuit, many people assume they owe the debt. This may not be the case. Ask the collector to confirm the amount of the debt, and the fact that they own it. Debt collectors in particular often purchase unpaid debts for pennies on the dollar. When they do, many documents change hands a number of times and can become lost somewhere along the way. If the debt collector cannot confirm that they owe the debt, they have no standing to collect on it or take legal action. 

 Enter Into Negotiations 

 Once you have determined that you are a good candidate for debt settlement, and you have confirmed the details of the debt, you can make an initial offer. This should be less than what you can afford to repay. For example, if you can afford to pay 70 percent of the debt, your initial offer should be for 40 percent. The collector will make a counteroffer and negotiations will continue until you have reached an offer both of you can agree to. 

 Get the Agreement in Writing  

It is critical that when you reach an agreement with the collector, you get it in writing. This will hold the collector accountable for honoring the agreement and ensure the creditor can not come back after you ever again for more money. It is important to note, though, that if you miss a payment, the collector can retract the agreement and you will be back to owing the whole debt. 

 Our Debt Settlement and Relief Attorney in Orlando Can Negotiate On Your Behalf  

Most people do not have the confidence or experience to successfully negotiate and draft an enforceable agreement on their own. At Florida Law Advisers, P.A., our Orlando debt settlement and relief attorney is a skilled negotiator and can help you obtain the most favorable terms in your agreement. Call us now at 1 (800) 990-7763 or contact us online to schedule a consultation and to get the legal help you need. 

Sources: 

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics 

 consumerfinance.gov/ask-cfpb/how-do-i-negotiate-a-settlement-with-a-debt-collector-en-1447/