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how to work out Settlements with Debt collectors

Posted Date : 03 Sep 2021

Posted By : Capitalneed

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How to work out Settlements with Debt collectors ?
 

If you have no option other than debt settlement, then the next step will be to choose between doing it yourself or hiring a professional to negotiate for the debt settlement. It has to be noted that only you know your problems better than anyone. You being their client, the lender is obligated to deal with you. So, you can try negotiating on your own with the lender. if in case, It seems to you that it is still not fruitful to you as it is too time-consuming, you can hire another service provider for this task. 
 

Outstandings and Debt settlements can affect your credit report, In future, If you want to another loan from banks or nbfcs, It may be difficult for a loan service provider to give you loan or may be they may not give you at a reasonable interest rate.
 

The main purpose of debt settlement negotiation is to put forth the fact that the borrower is financially in a bad position. With this, you can build your image or respect in the eyes of the lenders. In the remaining last few months of your card statement, cut your expenses for at least three to six months prior to requesting a settlement. This will make your lender consider your case with sympathy. 

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What is the negotiating process?

First of all, you have to call the customer care service department of the credit card bank. You then need to ask them that you have to speak to the concerned bank official or the manager in the debt settlement department. Once connected, You need to inform him the overall issues and severity of your current situation. THat, Why you want to settle the debt. But before doing this, You must be aware that you have to arranged a certain amount of money in regards to settlement of the account. Once paid, This way you are more likely to get a competitive offer.

 

You can start by offering 30% of your outstanding amount on the account balance. The creditor will probably try increasing it to a higher percentage, but if it is below 50% it will be fine and then you can consider settling.
 

Finally after both the bank and the borrower have finalized the debt settlement, You must ask them to get the agreement in writing. It is not recommended to proceed ahead with the verbal communication and agreement of a debt settlement. Note that the written agreement will help you in future as well if any dispute happens regarding the debts. 
 

Key Points on Debt Settlement :
 

  • A lump sum amount will be required for the one time payment for the debt settlement.
  • If you hire or allocate this debt settlement task to a professional concern or 3rd party who settle it on your behalf. Then, be careful and after checking every aspect of final settlement as well as in written document, You proceed ahead.
  • An agreement between the bank and the borrower to pay off an amount as a one-time payment instead of an existing balance in return for the forgiveness of remaining debt is called debt settlement. 
  • If you are going to settle by yourself then get in contact with the manager in the debt settlement department and start by negotiating 30% of your outstanding balance.


If in case, Your debt settlement gets fail and technically not possible to get settled, You can try other options to reduce your outstanding debts:
 

  • Reduce the monthly expenses & minimum payments 
  • Generating an alternate payment plan 
  • Ask for temporary pause in loan/credit card repayments until your financial situation gets better
     

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