9 Effective Debt Settlement Tips

The following debt settlement tips are designed to help you negotiate a settlement agreement that is in your best interest whether your creditor is a credit card company, auto loan provider, or other non-collateralized finance concern. Get started with debt reduction now.

One important point to remember when working up a debt settlement plan. More often than not, a debt settlement is in your creditor's best interest only if your other option is limited to filing bankruptcy papers, so use that to your advantage.

Achieve Results with our Debt Settlement Tips

• Always try to go as high up the chain of command as possible when dealing with personnel from the credit company. Avoid wasting time with a low-level bureaucrat, arguing on the phone or engaging in time-wasting conversation. Get as high up the company management list as you can until you get to someone that can make decisions on their own and really help you.
• Focus your efforts to negotiate on the creditor, not on yourself or your needs. You can mention the hardship you are facing, but at the end of the day, your creditor really only cares about one thing. You are going to need to show them the money. So focus on how the deal benefits the creditor.
• Get everything important in writing. Don't waste time dealing with automated phone services often used by creditors and debt collection agencies. Get any important agreements and information from a real person, in writing and signed by an authorized member of management.
• Don't let yourself be intimidated by anyone you are forced to deal with. Debt collection agencies in particular may try to use scare tactics to force you into making a payment, don't go for it. If you start making monthly payments again, it becomes much more difficult to conclude a debt settlement, so hold your ground and don't fall for any scare tactics.
• Know what your rights are. Many collection agencies employ outright illegal or borderline illegal tactics when pursuing debt collections. There are methods you can use to stop the harassment, give yourself time to think, and formulate a plan.
• Make sure your first offer is a lot lower than what you actually are able to pay. Debt settlements tend to go through a negotiating process where you and the creditor will be throwing offers and counter offers back and forth in an effort to reach a mutually acceptable agreement. By starting low, you are more likely to hit a favorable compromise through negotiation.
• Make contact with your creditor as soon as possible once you decide pursuit of a debt settlement is the best course of action. As soon as you start to fall behind with your loan payments, get in touch with your creditor and begin a dialog on how to solve the problem. Don't wait until they are banging on your door demanding money before you try to explain the situation. Early and regular communication usually leads to a better solution. You should also keep in mind that debt settlement usually only comes into play when you absolutely can't make monthly payments.
• Don't get carried away with your negotiations and never, I say again, never threaten the creditor. You can and should consult a lawyer, but don't do so in order to bring a lawsuit against a creditor when you legitimately owe a debt. If you are being hounded for a debt repayment that you don’t actually owe, then there is a legal process you can follow and still avoid a court battle.
• Keep in mind that you will probably have to pay income tax on the debt settlement so you should keep some extra money set aside for this purpose.

These debt settlement tips should help you find your way through the minefield of negotiating with creditors. If in doubt, you can always seek the assistance of a credit counselling service or a qualified lawyer.