Debt settlement companies are often known as “debt relief” or “debt adjustment” firms. In general, the companies offer to contact your creditors on your behalf in order to negotiate a better payment plan or settle or lower your debt. They usually charge a fee, typically a percentage of the money you’d save on the settled debt. On the other hand, it is a technique in which you pay a flat payment that is often less than the amount owed in order to resolve or “settle” your debt. It is a service often provided by third-party companies that promise to be able to lower your obligations by taking a בקשה להסדר נושים.
On the other hand, the primary differences between debt settlement through a company and doing it yourself are time and expenditure.
Step 1: Determine whether or not you are a good candidate.
Have you considered declaring bankruptcy or seeking credit counseling? Both have the potential to resolve debt with less risk, faster recovery, and more consistent results than debt settlement.
Do you have the necessary funds to settle? Some creditors will require a one-time payment, while others will allow payment plans. Regardless, you must have sufficient funds to back up any settlement deal.
Do you have confidence in your negotiating skills? DIY debt settlement requires a high level of self-assurance. If you feel you can, you most likely can! However, DIY debt settlement may not be the greatest option if your confidence is shaken.
Step 2: Understand your terms.
You must agree on two points: the amount you can pay and how it will be reflected on your credit reports. You may agree to settle your debts for 40 percent to 50 percent of what you originally owed. While you’re theoretically aiming to settle your obligation as a proportion of what you’re owing, consider how much you can pay in cash. Examine your budget to find out what that figure is.
By the time you’re eligible to settle, your credit has most likely been ruined by delinquent marks from missing payments. However, you may be able to partially redeem yourself by clarifying how the resolved debt is reflected on your credit reports. Debts that have been settled are typically recorded as “Settled” or “Paid Settled,” which does not look good on credit reports. Instead, you’ll attempt to persuade your creditor to record the settled account as “Paid as Agreed” in order to mitigate the damage.
Step 3: Make the call.
Dealing with your creditor will need perseverance and persuasion. This is a critical juncture in the settlement process. You may be able to negotiate the settlement in a single conversation, or you may need to make several calls to reach an agreement that works for both you and your creditor. If you don’t get along with one representative, call again to speak with someone more agreeable. If you aren’t getting anywhere with front-line phone representatives, request for higher management.
Approach the call with a clear story in mind. Concisely describing the financial difficulties that caused you to be unable to pay your payments will make the creditor more sympathetic to your situation. Don’t lose sight of the amount you can afford to pay. Begin by underbidding and working your way up to the medium ground. If you know you can only pay half of your initial loan, consider offering approximately 30%. Avoid agreeing to a payment that you cannot afford.
Step 4: Finalize the deal.
Before making any payment, obtain in writing from your creditor the terms of the settlement and credit reporting. Both parties are held accountable under a documented agreement. They are required to honor the arrangement, but if you fail to make a payment, the creditor has the right to revoke the settlement agreement and you will be back where you started.
“Debt settlement is about making a commitment.” “If you skip a payment, it’s game over,” explains Bovee. “Pretend you have a 12-month settlement plan. You pay the first six months, but if you skip month seven, they take the previous six months’ payments and apply them to your total sum.”