A debt settlement offer is a proposal to pay off a portion of a debt. It can be made by the creditor or by the debtor. This is a great way to get relief from a massive balance owed, but it may hurt your credit in the long run.
When negotiating, the amount you settle for should be the most reasonable offer. This means that it is likely to be less than the original sum you owe. The most common settlement figure is a minimum of 30% of the total amount you owe. However, the percentage will vary depending on the amount of time you have been behind on your payments.
Before attempting to negotiate, you should first check with your creditor to see if they are interested in making a settlement offer. They will most likely contact you about this. If they agree to it, the next step is to set up a payment plan. Once the settlement is confirmed, you will be asked to make payments for the lump sum.
Another option is to contact a debt settlement company. These firms will do a thorough check of your credit and then call your creditors to try to settle. Some companies will even give you a good deal over the phone. Be careful though, because some are not reputable and will end up being a big drain on your wallet.
The best way to avoid this is to make sure your settlement offer is based on an immediate lump sum payment. You can use a separate bank account to make the payment. In fact, a debt settlement company can allow you to make small deposits each month to build up a lump sum.
When deciding on the most appropriate debt settlement offer, you should also consider the age of your collection account. Older accounts are more likely to accept a settlement. And the statute of limitations is also a handy bargaining chip. As the clock runs down, debt collectors are more willing to offer a lower amount of money.
There are a number of benefits to debt settlement, but you should always negotiate in writing. Also, make sure you understand the law and what it means before approving a settlement offer. Make sure you read the fine print and follow the rules of the collection agency.
Remember that your settlement offer will not be accepted without an official letter from you. This letter should include a number, name, and mailing address. It should also explain why you are unable to pay the full amount. For example, you might have a recent medical issue or you might have lost your job.
Whether you are negotiating with your debtor or a debt settlement company, it is important to be sure you know what you’re talking about. Debt settlement can have a negative impact on your credit, so be sure you do your research before signing up with a company.
Debt settlement is not an easy process. It involves a lot of back-and-forth and a lot of paperwork. It can also take a long time. Even the most reputable companies will have a low success rate.