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Tips and Advice for Negotiating Debt Settlement

Overdue Bills ImageWhen it comes to debt repayment, negotiation can be a tricky process, especially if you’re doing it on your own. If you don’t feel like you have the most experience when it comes to the process, it can be helpful to do some research and prepare yourself with tips for making the most out of the situation. Here are some do’s and don’ts for trying to reduce your own debt.

Do:

Ask questions

The first thing you need to do is initiate conversation. Make sure you know what fees and interest rates are included in your debt. This will help you keep track of your financial status and let you know what type of repayment plan you should choose. If you have trouble discussing your options, be sure to ask to speak with a manager or other authoritative figure.

Organize your allowance

Make sure you have a clear understanding of your financial status. You won’t be able to negotiate payment or even offer a payment method if you aren’t sure how flexible your income is. Start a budgeting plan and list all of your expenses vs. how much money you have left over. Repaying debt can mean that you have to sacrifice those necessary costs, but it can be worth it.

Choose a method

If you can afford to pay your bill in one transaction, do it. If you don’t have the freedom to pay a off a balance in one lump sum, offer to pay a monthly minimum in efforts to resolve your debt over time. Once you have decided what you can offer to repay each month, let the credit company know. It’s important to be transparent with lenders and debt advisers so they understand what type of situation you’re in. Creditors will usually work with you if you make it clear that paying them is a priority, but that you just aren’t in the position to do it all at once. Whatever you do, try to steer clear from debt settlement. This option can negatively impact your credit score and leave you in a worse place than where you started.

Don’t:

Be a pushover

Stand your ground when speaking to collectors. You have every right to make your own decisions about your finances. By familiarizing yourself with debt collection laws, you’ll be able to negotiate with confidence.

Automate your billing

Whatever you do, don’t ever let a lender or collector encourage you to set up direct payment from your bank account. By giving your account information, you are giving collector’s access to your bank funds, and this can cause a sticky situation down the road.

Forget to get things in writing

Keep all written documents and a ledger for tracking phone conversations. Once you reach a payment agreement, it’s advised that you write the company stating your plan. Send it using registered mail so you have proof of its delivery. This will ensure that you and your collector are clear and set on the agreement. Also, if variables change throughout the repayment process, you’ll have a reference to demonstrate prior correspondence.

Ignoring debt collectors now can cause a headache in the future. Approach your communication efforts with confidence, and be open with your lenders about your ability to pay. Being honest about your financial circumstances will encourage others to help you resolve your debts the quickest and easiest way possible. If you need more help on effective debt management, visit our page for more tips.

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