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Can I Settle With a Debt Collector?

The financial industry is very segmented with each worker performing vastly different tasks. When you went into debt, your original creditor was probably a financial institution, bank or credit card company. Bankers are in the business of making loans. They are not in the business of recovering money from those who are having problems paying.

“Debt Purchased For Pennies on the Dollar”

Most debt collectors have purchased debt packages from the original creditors who don’t want to spend time trying to get the money back. Debt collectors purchase your debt for pennies on the dollar. They expect to only get a percentage of the debt back.

Debt collectors understand the legal process. They hope to “encourage” you to pay your bills. Lawsuits are long and expensive. They would prefer to settle with you.

Create a Financial Settlement Goal

Proactive settlement benefits all parties: creditor, debt collector and you. You don’t want to continue to be stressed out about your unpaid debt. You need to find a way out.

Assess your financial situation. What are your present payments? What do you want to accomplish with negotiations? What are you willing to surrender? What monthly payment levels can you handle?

For example, if a New York woman owes $10,000 on her credit cards and has monthly payments of $500, then what settlement goals should she consider? One, she could reduce the total debt balance below $10,000. Two, she could lower the monthly payment amount. Three, she could try to get the debt collector to remove any negative listings on her credit report.

“What is on your credit report?”

The Fair Isaac Corporation created your credit rating to help banks measure you as a credit risk. Your credit report includes your total debt balance, payment schedule, missed payments, accounts sent to debt collector and other financial information. Both the original creditor and debt collector have control over negative entries.

Debt collectors have different policies concerning settlement. These will range from demands for “payment in full” to offers to spread payments out while deleting negative lines on your credit report.

Deleting Negative Information

You have the right to dispute anything on your credit report. The credit reporting agencies must investigate any errors, mistakes or inaccurate entries. You must give a reason for any deletion.

Statute of Limitations

The debt collector has a statute of limitations for collecting the debt owed. The longest statute of limitations is for notarized documents and the shortest is for revolving credit card accounts.

When you make a payment to the debt collector, it automatically resets the statute of limitations because the partial payment “reaffirms” the debt obligation. So be very careful. Complete all agreements in writing before making any payments.

Only Sign When Completely Satisfied

Your debt probably has grown dramatically with principal, interest, penalty and collection fees added. Since most debt collectors purchased your debt for pennies on the dollar, they don’t expect to get 100% back.

Calculate your financial state of affairs. Determine what you are able to pay. Start negotiations below the amount you can pay. Figure out how payments will be made and what constitutes a breach of the agreement.

Don’t provide any bank account, employment or references. If the debt collectors have your job information, they might garnish you wages.

Get a written letter listing the new balance, payment amounts and when they are scheduled to be made. Only sign when everything is satisfactory.

Professional Debt Negotiators

Eventually, you need to face the music. Debt settlement stops the endless treadmill of debt that leads to nowhere but frustration. No one wants to file bankruptcy; debt arbitration is a real alternative. Reduce the actual balance and re-establish a sensible payment schedule.

Get professional negotiators on your side. Debt settlement is the most sensible response with both sides winning and losing. Your debt problems are not going to magically go away. Consolidate your debt into a more manageable format. Get started today with your free debt analysis.

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