Working out a settlement deal with a creditor or a debt collection might sound intimidating but it's actually easy when you know what to expect. Apart from getting a reasonable amount to repay the debt, you can also minimize the damage the debt will cause to your credit report. The good news is, a large majority of collection companies and creditors are willing to take less than the original amount of money owed.
Debtors can either shoot for an installment basis of repayment or pay a lump sum to get rid of the debt completely. Whichever way you chose to repay the debt, it is important to know what you can and hat you cannot do during the negotiation period. Below are some tips you should keep in mind when dealing with a debt collection company or creditor:
Set Your Emotions Aside
Don't let anger, guilt, shame or embarrassment break down communication between you and your creditor. It's best to address the issue calmly and be honest about your financial situation with your creditor. Getting upset or crying will only make communication difficult so set aside whatever emotional issues you have attached with the debt and ask for options instead. Choose the option which suits your current financial situation and settle the debt as soon as you can.
Don't let anger, guilt, shame or embarrassment break down communication between you and your creditor. It's best to address the issue calmly and be honest about your financial situation with your creditor. Getting upset or crying will only make communication difficult so set aside whatever emotional issues you have attached with the debt and ask for options instead. Choose the option which suits your current financial situation and settle the debt as soon as you can.
Stop Spending!
If you have mounting credit card debts to think about, the only logical thing to do is to stop using your credit cards and close most of your accounts to stop the accruing interest charges and minimize penalty fees. Once you closed these accounts, try to negotiate for a smaller amount of repayment and set it in an installment basis. Offer as low as 30% of the original debt amount and work from there.
If you have mounting credit card debts to think about, the only logical thing to do is to stop using your credit cards and close most of your accounts to stop the accruing interest charges and minimize penalty fees. Once you closed these accounts, try to negotiate for a smaller amount of repayment and set it in an installment basis. Offer as low as 30% of the original debt amount and work from there.
Repair Your Credit
Unpaid debts cause negative impact on one's credit report which is why it is important to repair your credit as soon as you start paying off what you owe. Here's a great tip, ask your creditor or collection company to note that the debt is paid off satisfactorily rather than less than what was due. This might not entirely remove the bad marks but it will improve your credit history that you will be able to apply for bigger loans and mortgages easily in the future.
Unpaid debts cause negative impact on one's credit report which is why it is important to repair your credit as soon as you start paying off what you owe. Here's a great tip, ask your creditor or collection company to note that the debt is paid off satisfactorily rather than less than what was due. This might not entirely remove the bad marks but it will improve your credit history that you will be able to apply for bigger loans and mortgages easily in the future.
Keep all the tips above in mind to reach a reasonable settlement. However, if you are not sure about negotiating with your creditor or collection agency on your own, you can always consult an experienced debt collection lawyer to guide you through this ordeal.
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