Negotiating your own debts with creditors and collection agencies can save you a bit of money, but there are several pitfalls to avoid during the process. Just like doing your own credit repair, you’re going to need to be patient and pay close attention to details. Because while you may be saving money, you certainly won’t be saving yourself time or aggravation. However if you’re up to the challenge, the benefits of debt relief are their own rewards.
Get Ready for the First Phone Call
You need to have any important information about the credit card debt that you’re calling about available. This includes recent bills or any letters that the creditor or collection agency may have sent you.
You also want to have an idea of what you can pay them, whether it be in a lump sum or broken down over a few months. Do not agree to pay more than you know is possible or you’ll just end up in the same predicament a few months down the road.
Don’t Get Intimidated
Collection agencies and creditors aren’t generally the nicest people to talk to if your account happens to be overdue. Their tone will be harsh and they will try to direct the phone conversation in the manner they’ve been taught. State your purpose from the beginning; that you are looking to negotiate a payment with them.
Do not get irate or use profanities no matter how upset you become. This will get you nowhere, and will likely result in worse results. Try to have the call elevated to a supervisor if possible as they are more likely to reach a deal for a reduced amount.
Be Detailed
Every correspondence or agreement you make should be in writing before you actually start making payments. Collection agencies are notorious for telling you one thing on the phone, then “forgetting” that the conversation ever happened. If you reach an agreement that you are happy with, get it in writing first.
Make sure that every last detail is part of your agreement. You need to be as specific as possible as to the dollar amounts that you will be paying as well as the exact dates that they will be receiving these payments.
Be Reasonable
If you’re trying to settle a $20,000 debt for $250 then you’re out of your mind. Expect to pay between 30 to 50 cents on the dollar for most credit card debts. There are various factors that play into what percentage a collector will accept; 30%-50% is just an industry average. You may encounter a situation where they are unwilling to negotiate at all. They may have a plan for suing you in court for the entire amount.
Be Patient
Make no mistake about it, while settling your own debts is intensely gratifying, it’s going to try your patience. You need to keep a detailed log of every correspondence made between you and each of your creditors, collection agencies and their attorneys. Make sure you seek help if necessary, there are plenty of debt relief companies out there that will give you a free consultation to let you know what kind of predicament you’re really in.
Make sure you know your rights as a consumer and that you’re versed in both state and federal laws regarding your situation. While it may seem like an impossible task your financial future may very well depend on it. If you settle those debts now, you may find your credit score in a year or two is much higher than you’d ever imagined.
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