Paying off a part of your debt through a debt settlement program can appear as an intimidating move, especially when you feel like you’re drowning with payables. However, one of the reliable facts in the credit lending business is that you can negotiate. Whether the terms look like it is carved on stone, obtaining a discount is usually as effortless as looking for the right person to ask and the proper way of asking.
When talking about outstanding balances for credit cards, there are high chances of negotiating how much you owed. Even when you are not that knowledgeable of the credit business, you can arrange to decrease your balance as low as 50% of it with the right amount of guts.
Debt Settlement Basics
When talking about debt settlement, it refers to an agreed arrangement between the borrower and lender for a large, one-time payment of an outstanding balance in exchange for writing off the remaining debt. An example is when a person has a credit worth of $5,000 on a credit card, the borrower can settle with the credit card firm and suggest to pay half of it. In exchange for this arrangement, the credit card firm confirms and writes off whatever is left of the debt, $2,500.
You may wonder why the credit card firm will close the significant portion of the outstanding balance. Typically, due to the creditor’s financial condition, he may doubt that you are unable to pay the entire balance fully, or he lacked funds at the moment. Either way, the credit card company is protecting its financial reserves, something you must take note of when making a debt settlement negotiation.
Usually, credit cards have no security in their loans. It doesn’t have any collateral that the credit card firm or the collector can seize if you cannot settle the balance. Performing a debt settlement negotiation with the credit card firm may be appealing, but it has its downside. Creditors find it unfavorable to advertise settlement, and it is not always completely successful. But if you are extremely behind with your payment schedule and almost as close in filing a bankruptcy, your creditor will allow it, providing you the final chance to be financially stable again.
Appearance Is Important factor
An essential factor to remember when going for a debt settlement negotiation is to present that you are having financial difficulties. When the creditor sees that you’re barely surviving, the chances of losing out is lower than of rejecting the offer.
On the other hand, when the credit card statement shows that you’ve been to numerous luxurious trips and accommodations, the creditor will most likely not believe you’re not capable of settling your debt. To increase your possibilities of success, don’t use your credit card for the next six months before negotiating for a settlement.
Furthermore, if you have made a minimum payment promptly for several months, you may appear as someone who wants to avoid paying his debt agreement. The debt settlement negotiation should be made to the firm that you have been struggling to pay and have way past due payments.
When performing a negotiation with the creditor, you will hear a no at some point. Don’t lose hope and try another way. Perhaps offer an amount you can afford or suggest a payment plan that suits your finances. It pays to always try up to the very last option you have.