When you get to the point where you cannot even afford your minimum payment to cover all your debts, you may think about bankruptcy; however this is the wrong move. Bankruptcy protection will only give you short term relief and destroy your credit, meanwhile you will eventually have to pay back all of your debts anyway, but from scratch. Filing for bankruptcy is the wrong move. Negotiating down your debt is and settling it is the best option for someone facing debt problems.
Here are some tips to avoid bankruptcy and negotiate a settlement to get out of debt
Time is on your side: Time is the best healer. The longer your debt goes unpaid the more willing and eager the creditors will be to offer a settlement. Your chances will only increase with time and no payments being made. From the creditor’s perspective, they have a debtor that hasn’t made a payment in 12-18 months and then all of the sudden calls them up and offer a lump sum payment for 30% of the total debt, more often than not the creditor will take that settlement and move on. This is much better than chasing the debtor for another 12 months. Now, this is not the cure all to all debt, because it does depend on the amount owed and the creditor seeking the debt. Often times the creditor will purse legal action by suing you and at the very extreme attempting to receive a judgment and garnish your wages. The majority of cases do not go this far as the creditor is willing to work with the debtor on a settlement, but it has happened before. If you start to receive calls from a different collection agency this is good news for you, because this indicates that the first creditor has given up and now it’s the second creditors turn. This will mean that the second creditor is more likely to accept a reasonable settlement from you. So, the more time you take in saving money and not paying the creditors, the more favorable settlement you may get. Use time as your weapon against your debt.
Do not accept the first settlement offer: Continue negotiating even if you think you have a decent settlement offer. Often times the first offer is a starting point of negotiation, while it may take a few more months to receive a decent offer that works for you. Do not seem too eager to settle, because if the creditor notices that then they may not offer you a decent settlement. Stay strong and hold out, eventually you will get something that works for both you and the creditor. Think of the first offer as a starting point.
Inform the creditor of the Statute limitations: Let the creditor know that you are aware of the statue of limitations and that the creditor only has a certain period of time in collecting the debt. Keep abreast of the new laws and regulations that come about that protect consumers from predatory creditors. Use this as a negotiating tool.
Make threats of bankruptcy: Let the creditor know that you may want to file for bankruptcy instead and if that happens the creditor will not get anything (depending on the situation). Again time comes into play here, if you file for bankruptcy the creditor needs to get in line to collect and it may be a long while before that can happen. The creditor knows that bankruptcy will drag your case further out and hence will be willing to offer a more attractive settlement. Of course, you are just using this bankruptcy threat as a leverage tool, since (as stated above) bankruptcy is not a great option when dealing with debt. Create the illusion that you are trapped and it is either a very low settlement figure or bankruptcy that will work, the creditor will most likely accept the settlement figure.
In conclusion: Use the many tools discussed here to dictate the negotiation to your creditor. Be in control of when you want the final settlement to be and for how much. Remember, they need something from you and are willing to make a deal. Settle those debts and get that fresh start that you deserve!
MyDebtLiberty.com is your best solution to your unsecured debt problem. Our specialized and professional back end negotiating staff has settled over 500 million dollars worth of debt for thousands of customers. Our efficient negotiations, courteous and customer-friendly staff, and proprietary client management system come together to offer the BEST solution for debt settlement and help you get out of debt! Call toll free 866-659-9601.