Debt settlement, also known as debt negotiation, is a strategy that allows you to settle your debt for less than the total amount owed.
On the plus side, debt settlement allows you to eliminate your debt for less than what you actually owe, thus putting you in a better situation.
Conversely, the main hang-up with debt settlement is that the creditor must agree to proceed. While there is no guarantee of working out an agreement, there are steps you can take to improve the likelihood of this happening.
Here are four steps you must take :
1. Contact Your Creditor to Explain Your Situation
This is where the process begins. It’s your responsibility to contact the creditor with the idea of helping them better understand what you’re up against.
During this time, explain why you’re unable to pay your debt in full, such as if you’re being treated for a serious illness or are out of work.
Note: your creditor can answer any questions you have about debt settlement, so don’t be shy about asking.
2. Keep an Open Mind
You may go into the process with one thing in mind, just to find that your creditor offers something else.
You’re in a bad spot financially, so you shouldn’t shut down any idea. If it can save you money and reduce financial stress, it’s something to consider.
3. Talk to More than One Person
The first person you speak with may not be the person who is able to help you. Instead, you need to ask around until you finally reach the department that can assist with settling your debt.
It requires patience to find the right person, but once you do you’ll finally be in position to take action.
4. Review the Final Terms and Conditions
If your creditor agrees to settle your debt, ask them to provide you with final terms and conditions of your agreement. This will give you a clear idea of what’s expected of you now, and any impact on your account in the future.
Benefits of Debt Settlement
Debt settlement isn’t the only way to solve your financial problems, but it’s a strategy to review in detail if you don’t have the means to pay your balance in full.
Some of the top benefits of debt settlement include:
- Pay less than the total balanced owed
- Opportunity to repay your debt in less time
- Instant relief from debt that’s been weighing you down
- Help you avoid a bankruptcy filing
With so many benefits, contacting your creditor to negotiate your debt may be in your best interest.
There’s no guarantee your creditor will agree to your request, but explaining your situation is a good place to start. If you find that debt settlement is an option, you can proceed immediately with the goal of improving your finances and feeling better about your future.