Solution to your debt: Settle your Debts on your own and eliminate card debt. You may have been told by debt settlement “professionals” that you will not be able to settle debts yourself, and that they are the only ones who know the secrets. Not true. Take a deep breath. All new things seem overwhelming. You may have big doubts about doing settling your debts.
Let’s just break this down into manageable steps. You need to determine:
1. Who to contact
2. How to contact a creditor
3. The kind of personal circumstances a creditor likes to see
4. How much to offer
5. How to pay
6. Negotiate your credit rating
Who do you contact?
You would contact the original creditor’s customer service department. With the original creditor, it is perfectly acceptable to initiate contact via the phone. If you still have your credit card, the 1-800 number to call the company should be listed on the back of the card. Otherwise, you can look up old
statements and find it. You can also call the toll free information directory at 1 800 555 1212.
How do you make first contact?
One thing to remember, as you speak to a representative, they are taking notes and these notes go into your account information permanently. Keep your story simple and straightforward. Don’t lose your temper or swear with a rep. Once you call, ask for the customer service department. When the agent gets on the phone, ask for the status of the account. If the account is in collections, you may also find that you will be transferred to the collections department of the company. Don’t panic, this is all normal.
Once you get the right customer rep on the line, ask them if they would be interested in considering an offer to settle the account, or if you have to go through the collection agency currently handling the account. You absolutely need a written agreement between you and the creditor before you sent them a single penny. If you don’t like the offer, tell them you will think about it and get back to them.
What makes a creditor say ‘yes’ to a debt settlement?
In very rare circumstances (like never) creditors agree to help you out of your debt problems because they are nice people. Creditors agree to a plan because they may feel this is their only chance to get money from you. Their thinking is that some money is better than nothing. You can help this impression along by hinting that your only other option is declaring bankruptcy. However, no matter what you may hint or flat out state to them, creditors have their own ways of determining if you are teetering on the brink of bankruptcy.
What would make you appear as a candidate for bankruptcy?
If you haven’t been making payments on any of a significant portion of your debts, especially credit cards. If you don’t have anything to lose in a bankruptcy like a home or car. People who are out of work, or show no probable future increases in pay.
You may think to yourself, “Ok, well, I’m going to tell them that I haven’t been making payments on my other accounts, I’m out of work and I don’t own anything.” Be careful about this, as creditors have usually invested large sums of money on high technology information gathering systems about their clients. In talking to a representative for a major auto-loan company, a piece of software they run obtains the following information may be gathered by just entering in your phone number:
�� Where you bank
�� Your credit rating
�� Your criminal records
�� Your payment history on all of your accounts
�� Where you work
�� How much you make
�� Whether or not you own a home, a car, boat, etc.
Where is this software getting this information? From your credit report, from the credit application you originally gave them, public records, motor vehicle division, Social Security Administration, you name it – if records are public, you can bet they are being accessed. Public records not only contain any court records, but also recording of deeds of trust and other property transactions. Are we getting the picture?
How much should I offer?
This is the number one question asked when someone begins the debt negotiation process. How much should I offer to settle the debt?
Each creditor is different
Like any other industry, each company in the credit card industry has its own debt settlement policies. You may be able to settle with one company for 30 cents on the dollar with one and 75 cents on the dollar with another, even though the amounts of the debt and the terms of the repayment plan are identical.
Lump sum offerings
Obviously, if you are going to give your creditors cash, they will be much more interested in working with you. You will always get a better deal when offering cash. As a matter of fact, you may not get ANY deal if you offer includes a payment plan. What if you don’t have any cash? We’ll cover that in a minute. However, if you have cash, you can usually get 30-50% reductions in the balances of the debt you owe, sometimes even lower.
How to Pay? Payment Plans.
If you don’t have all of the cash that you need to pay off your agreed upon debt settlement, you have two options: a short-term payment plan or going on one of their “hardship programs.”
Short-term: You will get the best terms, as stated before if you can make a lump sum payment. Some creditors will still agree to a sizeable debt reduction if you can pay off the whole amount in 3-6 months. If you need to stretch things out to 6 months, you will have less clout but still be in a strong negotiating position. For most companies, being able to pay off the debt in 3 months is the same as a lump sum payment.
Hardship program: Credit card companies are used to dealing with the many debt reduction companies out in the world, and to save time by coming up with a custom plan for each one, they usually have one type of program to place people on who want to pay their debts but need 1-4 years to pay it off. One note here, Discover, as of this writing, just changed its policies to allow people one year maximum time limit to be on their hardship program.
Long-term payment plans: If you’re a great negotiator, you may be able to get a long term payment plan to pay off your debt. I wouldn’t count on it, though. Most credit card companies will try and enroll you in their hardship program. Also, payment plans may come at an interest rate as high as 20%. Obviously, the longer you take to pay off your debt, the more money you will pay. Keep in mind that your debt payment plan doesn’t have to include interest. This is one more thing for you to put on the negotiation table.
Paying via “Check by Phone”
“Check by Phone” is a procedure where you give your creditor your checking account number and they deduct an amount from your checking account. In some cases, credit card companies will only take a check by phone. This is fine. It’s the collection agencies you have to worry about paying using this method.
Don’t forget to negotiate your credit rating
You should always push for a Perfect Pay Rating. Your final goal in negotiating your credit rating is to get the creditor to list your credit rating after the settlement as "Paid as Agreed" or "Account Closed - Paid as Agreed". Anything other than this listing will have a negative effect on your credit report. One note here: It is getting tougher and tougher to get credit card companies to change negative history to positive history. The only way most of them I talked to will agree to do this is if you pay off your entire balance in full, including all interest and penalties.
******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
Let’s just break this down into manageable steps. You need to determine:
1. Who to contact
2. How to contact a creditor
3. The kind of personal circumstances a creditor likes to see
4. How much to offer
5. How to pay
6. Negotiate your credit rating
Who do you contact?
You would contact the original creditor’s customer service department. With the original creditor, it is perfectly acceptable to initiate contact via the phone. If you still have your credit card, the 1-800 number to call the company should be listed on the back of the card. Otherwise, you can look up old
statements and find it. You can also call the toll free information directory at 1 800 555 1212.
How do you make first contact?
One thing to remember, as you speak to a representative, they are taking notes and these notes go into your account information permanently. Keep your story simple and straightforward. Don’t lose your temper or swear with a rep. Once you call, ask for the customer service department. When the agent gets on the phone, ask for the status of the account. If the account is in collections, you may also find that you will be transferred to the collections department of the company. Don’t panic, this is all normal.
Once you get the right customer rep on the line, ask them if they would be interested in considering an offer to settle the account, or if you have to go through the collection agency currently handling the account. You absolutely need a written agreement between you and the creditor before you sent them a single penny. If you don’t like the offer, tell them you will think about it and get back to them.
What makes a creditor say ‘yes’ to a debt settlement?
In very rare circumstances (like never) creditors agree to help you out of your debt problems because they are nice people. Creditors agree to a plan because they may feel this is their only chance to get money from you. Their thinking is that some money is better than nothing. You can help this impression along by hinting that your only other option is declaring bankruptcy. However, no matter what you may hint or flat out state to them, creditors have their own ways of determining if you are teetering on the brink of bankruptcy.
What would make you appear as a candidate for bankruptcy?
You may think to yourself, “Ok, well, I’m going to tell them that I haven’t been making payments on my other accounts, I’m out of work and I don’t own anything.” Be careful about this, as creditors have usually invested large sums of money on high technology information gathering systems about their clients. In talking to a representative for a major auto-loan company, a piece of software they run obtains the following information may be gathered by just entering in your phone number:
�� Where you bank
�� Your credit rating
�� Your criminal records
�� Your payment history on all of your accounts
�� Where you work
�� How much you make
�� Whether or not you own a home, a car, boat, etc.
Where is this software getting this information? From your credit report, from the credit application you originally gave them, public records, motor vehicle division, Social Security Administration, you name it – if records are public, you can bet they are being accessed. Public records not only contain any court records, but also recording of deeds of trust and other property transactions. Are we getting the picture?
How much should I offer?
This is the number one question asked when someone begins the debt negotiation process. How much should I offer to settle the debt?
Each creditor is different
Like any other industry, each company in the credit card industry has its own debt settlement policies. You may be able to settle with one company for 30 cents on the dollar with one and 75 cents on the dollar with another, even though the amounts of the debt and the terms of the repayment plan are identical.
Lump sum offerings
Obviously, if you are going to give your creditors cash, they will be much more interested in working with you. You will always get a better deal when offering cash. As a matter of fact, you may not get ANY deal if you offer includes a payment plan. What if you don’t have any cash? We’ll cover that in a minute. However, if you have cash, you can usually get 30-50% reductions in the balances of the debt you owe, sometimes even lower.
How to Pay? Payment Plans.
If you don’t have all of the cash that you need to pay off your agreed upon debt settlement, you have two options: a short-term payment plan or going on one of their “hardship programs.”
Short-term: You will get the best terms, as stated before if you can make a lump sum payment. Some creditors will still agree to a sizeable debt reduction if you can pay off the whole amount in 3-6 months. If you need to stretch things out to 6 months, you will have less clout but still be in a strong negotiating position. For most companies, being able to pay off the debt in 3 months is the same as a lump sum payment.
Hardship program: Credit card companies are used to dealing with the many debt reduction companies out in the world, and to save time by coming up with a custom plan for each one, they usually have one type of program to place people on who want to pay their debts but need 1-4 years to pay it off. One note here, Discover, as of this writing, just changed its policies to allow people one year maximum time limit to be on their hardship program.
Long-term payment plans: If you’re a great negotiator, you may be able to get a long term payment plan to pay off your debt. I wouldn’t count on it, though. Most credit card companies will try and enroll you in their hardship program. Also, payment plans may come at an interest rate as high as 20%. Obviously, the longer you take to pay off your debt, the more money you will pay. Keep in mind that your debt payment plan doesn’t have to include interest. This is one more thing for you to put on the negotiation table.
Paying via “Check by Phone”
“Check by Phone” is a procedure where you give your creditor your checking account number and they deduct an amount from your checking account. In some cases, credit card companies will only take a check by phone. This is fine. It’s the collection agencies you have to worry about paying using this method.
Don’t forget to negotiate your credit rating
You should always push for a Perfect Pay Rating. Your final goal in negotiating your credit rating is to get the creditor to list your credit rating after the settlement as "Paid as Agreed" or "Account Closed - Paid as Agreed". Anything other than this listing will have a negative effect on your credit report. One note here: It is getting tougher and tougher to get credit card companies to change negative history to positive history. The only way most of them I talked to will agree to do this is if you pay off your entire balance in full, including all interest and penalties.
For The User
******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
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