How to Negotiate with Creditors for Debt Settlement

April 24, 2020 at 4:00 AM

If you’re struggling to pay your bills because of overwhelming debt, you do have options that can put you back in control of your financial situation. The reality is, a lot of people end up facing more debt than they can handle. Anything from losing your job to divorce or having to put large emergency expenses on credit can lead to a rapid downward spiral.

Debt settlement is one of the top solutions for getting out of debt and reaching financial freedom. The only problem is, you have to negotiate a reasonable balance with your creditors in order to get anywhere with your debt. For most people, this is difficult to do on your own.

At DebtHelp, Inc, we have been helping clients get out of debt for nearly 15 years. We want you to know how debt settlement works so you can benefit as much as possible from the process.

Who Can Benefit from Settling Their Debts?

Settling isn’t for everyone. For example, it won’t work for secured debts such as your mortgage and your auto loan. It’s specifically used in cases of unpayable unsecured debt. If you have over $5,000 in unsecured debt and are having trouble making payments on time, you may be a good candidate. Unsecured debt includes credit cards and any unsecured personal loans.

Debt settlement is more likely to be effective in situations where creditors believe the borrower may not otherwise pay off the balance, for example, if someone makes late payments or has missed payments.

How to Negotiate for a Lower Balance

You can call your creditors yourself to try and negotiate your balance. The goal is to reduce the amount owed to a manageable level. If you settle for an amount you can’t afford to repay, you can lose the settlement agreement. So, step one is to understand what you can reasonably afford. For example, if you can afford payments on 60 percent of your current balance, you can make that your settlement end goal.

The biggest problem with balance negotiation is that most creditors won’t budge on the balance when a borrower calls. If you ask for the wrong amount, they may refuse you. It’s not unusual to get a flat-out no on your first call.

In this case, you still have options:

  • Be persistent. You can try calling again and speaking to a different agent. You can also ask to speak to a manager.
  • Consider alternatives such as Chapter 7 bankruptcy, although keep in mind, this will have a long-term impact on your credit.
  • Use a debt relief company that has direct experience with creditors. They can settle your debt for you.

At DebtHelp, Inc, we have developed an effective Debt Settlement Program that revolves around your unique situation. We’ll work to settle any unsecured debt so you only have to pay a portion of your current total balance. Instead of the frustration of not getting anywhere with creditors, reach out to our team today. We can look at the details of your circumstances, create a plan that you can manage, and negotiate on your behalf.

Remember, there are always options. Contact us and learn more about debt relief today.