Although it is never easy to face debt that has gone into default, it can turn out to be a far bigger booster of stress if people choose to ignore the onslaught of phone calls and collection notices rather than negotiating towards a solution. The basic and understood fact is that collection agencies, credit card companies and other creditors would rather get something than be left empty handed as in the case of bankruptcy. Keeping that in mind, the best way of introducing compromise between an individual and their creditor is to devise a proper strategy for debt settlement. There are some tips that can help people in coming up with an effective and beneficial strategy such as:
- Offer Feasible Payments
When people wish to negotiate in an effective manner, they need to know the exact amount that they can actually afford to pay back. All collection notices should be opened and a debt settlement budget should be created such that it is easily sustainable. While negotiating, it is best for individuals to offer to make small and feasible payments, which they know they will be able to pay rather than promising large payments that they will be unable to pay and will lead them back into default. If they can afford to pay a certain percentage of the full amount or even half of it, they can use it as a bargaining chip.
- Initiate Contact
Individuals should write letters and make phone calls or do both. A log should be created for every call that's made in a notebook. The name of the agency, the date and the name of the person who was consulted and the details of the conversation are some of the things that should be noted down.
It is time for individuals to start negotiating their debt settlement. They can negotiate for lower interest rates or eliminating part of the debt. Each collection agency and company should be informed about the exact amount that can be paid by the individual every month for paying off the debt. Therefore, individuals can either offer to pay half of the amount or a certain percentage of the amount, whichever seems reasonable for settling the debt fully. It is possible that a number of creditors may have given people this option in their collection notices and will be willing to comply. However, people should ensure that all these settlements are put into writing as proof of the agreement.
- Hire an Agency
While people can choose to negotiate and settle their debts on their own, hiring an agency to do the same is also an option. These are professionals that specialize in settling debts for a fee. The agency is provided with the debt information and they will contact the creditors for negotiating settlement. A monthly lump sum is sent to the agency by the individuals, which is then distributed amongst the creditors after the agency deducts its fee. Nonetheless, when people decide to use an agency for debt settlement, they should select one that's reputable.