Before starting with the tips for negotiating with creditors for debt settlement, let’s understand the term “Negotiation”. Negotiation is a conversation between two or more parties to resolve the problem for mutual beneficial outcome.
If you are negotiating on your own with the lender then as early as possible you need to explain your financial situation to your lender for better relations. If your lender understands your situation that you are unable to pay your dues then that could be easy for you to come out of your debt harassing situation.
- Determine if Negotiation is correct for oneself (borrower).
You can’t determine if negotiation is correct for oneself or not until the individual have calculated the amount of money he needs to owe in the reasonable time frame. If he/she thinks that reasonable period is unrealistic i.e. it is impossible to pay in given time frame then negotiation is good choice for him/her.
- Establish Negotiation terms.
Once it is decided that the individual is undergoing in the process of debt settlement then he/she needs to take another assessment for its own benefit. He needs to take time to calculate the exact amount that he could afford to pay to lender. Depending upon the debt type and amount, repayment of loan need to be decided whether it could be paid in lump sum amount (one time settlement) or can be paid in installments.
- Keep simple and constant story.
Keep a list of reasons why you are unable to pay further. Debt often results from hardship such as job loss, medical emergency, divorce, pandemics etc. Putting them down on paper to use as a reference you are negotiating for debt settlement is useful.
- Written Agreement
Whether one is negotiating directly with creditors or collection agency, he/she need to get an agreement in writing. As one has gone through lot of hardship in keeping notes and maintains conversations, the final step is to get things documented in an agreement form.
- Fix the percentage.
It is necessary for the borrower to fix the percentage for repayment of outstanding unsecured loan. If you want to decide to settle your unsecured loan then aim for 50% or less. It might take time to accept the proposal but once accepted then creditor might get agreed upon 30% to 50% of the debt. So while negotiating start with lower offer only.
- Schedule your payments.
After finalizing the negotiation, it is very important to fulfill your end of the agreement by making payments on time and in the agreed manner. This shows your professionalism and reliability but also ensures that the party receives the compensation they are due for their products or services. By repaying the amount regularly you establish a sense of trust and goodwill, good reputation within the industry.
- Keep cash in hand.
Creditors are more likely to settle if you can transfer the payoff funds right away. If you pay lump sum amount to the creditor then offer to send the money immediately to the creditor, you’re more likely to get a lower settlement. Creditors are more willing to collect more cash today rather than waiting for it to be paid in multiple installements.
- Know your rights.
In the situation you deal with an unfriendly collector, so the rights given under fair Debt Collection Practices Act (FDCPA) one should be aware of. Specially, what a collector cannot do under the act is:-
Threaten you with arrest.
Falsely present themselves as government employees or subcontractors working on behalf of the IRS.
Force to repay debts that one doesn’t owe.
Shaming or insulting publicly.
Use other harassing tactics.
- Find Alternate Debt Negotiation.
Some borrowers may have pathetic experience with trying to settle debt with creditor and further do not want to go through this process. It is more likely that borrowers who decide against settling debts are not in good position. This typically happens when borrower’s is not able to access this lump sum amount to offer creditor or the debt of borrower is too much too see a way out of it. In other case borrower may not want a negative impact of debt settlement on his credit score.
Get in touch with us today at www.Settleloan.in and embark on your path to financial freedom
