Can I Negotiate a Debt Settlement on My Own?
When you face a debt issue, the first thing you want to do is to get back control.
Therefore, it makes sense to consider sorting things out by yourself.
Regaining control over your financial situation can happen in more than one way.
You can get in touch with a professional debt relief advisor who can help you manage your debt.
But, you can also negotiate a solution by yourself.
We hear you:
Can I negotiate a debt settlement on my own?
The answer is yes.
You can approach your creditors and come to an arrangement.
It can be a cost-effective solution to find a path out of debt.
You need to be sure that you can negotiate the best debt settlement for your situation and that you can afford to carry out the agreed solution.
Who can consider negotiating a debt settlement?
Negotiating a debt settlement is for individuals who have debts.
You can reach out to your creditors at any point through your debt journey, whether you’ve got only a few late payments you’d like to settle quickly or whether you’ve accumulated substantial debts.
In principle, a debt settlement is an offer you make to your creditors.
If they agree, they will consider that the debt is paid in full even though you pay less than you owe.
The challenge in negotiating your debt settlement is to negotiate a sum that you can afford, but that will also keep your creditors satisfied.
The reason why it works is that your creditors know and understand that it’s the only way for them to get paid, even if it is less than they expected.
Any individual in Canada, either citizen or resident, can negotiate their own debt settlement.
However, as you will manage the full negotiation process, it will help if you are a confident and fluent speaker.
How much do you pay with debt settlement?
There is no set rule regarding how much money you can save through a debt settlement plan.
Most creditors can agree to a debt reduction of approximately 50% of the amount you owe for old debts.
With careful negotiations and convincing arguments, you may even be able to get your payments down to 30% of the original amount.
Nevertheless, creditors will expect to pay up to 70% of the money you owe for new debts.
Common sense prevails in debt settlement.
Creditors accept your offer only because they believe it is the only option for them to receive a payment, even if it is inferior to the amount of the debt.
In other words, your debt settlement negotiation will not be successful if your account is in good standing, and you’ve never had a late payment.
If you explain your situation, creditors may still be willing to negotiate an interest rate reduction instead.
The process can save you a considerable amount of money if you are successful.
For many people, being able to agree on a debt reduction can provide the financial breathing room necessary to regain control.
But, you also have to consider another money-saving factor.
Debt settlement companies charge their customers a custom fee when they accept the case.
How do I negotiate a debt settlement on my own?
The first step of every negotiation is to assess your situation and understand what you can do and what you can afford to do.
Approach the negotiation with a clear strategy.
You can decide to offer a lump sum payment or come up with a payment plan over a longer period of time.
If you can afford to pay a lump sum early, creditors tend to agree on a more generous debt reduction.
Negotiating the best debt settlement for your situation requires an organized mind.
Make sure you have listed all your creditors, how much you owe, and how much you can afford to pay.
Preparing your story will make a great deal of difference.
You don’t need financial accreditation to negotiate your debt settlement.
But you need a background story that is true, credible, and convincing.
You don’t have to reveal embarrassing personal details, but you should explain the reason for your debts and why you believe that a settlement can sort things out.
Convincing creditors for a debt settlement
Make it clear to your creditors that a debt settlement is the best option you can offer.
If you are considering filing personal bankruptcy or a consumer proposal, don’t hide the fact that you would rather try to settle your debts with them first.
Indeed, other settlement plans will be administered by a licensed insolvency trustee and settle on much lower amounts.
In the case of bankruptcy, your creditors don’t get any tangible repayment.
Keep a clear mind as well if you are already dealing with collection companies.
While these are authorized to contact you and ask for money, they should never threaten or be rude.
Knowing your rights will help you through the negotiation process.
How do I confirm the debt settlement agreement?
You’ll be talking to the creditors and collection agencies that work on their behalf on the phone.
The first rule is to know who you are talking to and also that they are the right person to discuss debt settlement with you.
Write down everything along the way, ensuring that you understand what is said.
It is, therefore, more effective to talk directly to your creditors than to collectors.
If you come to an agreement over the phone, don’t waste any time in sending back an email confirming the terms of the deal.
The debt settlement is official once your creditors reply to the email to confirm the terms and send any additional documentation, if relevant.
What if my creditors refuse to agree to a debt settlement?
You can try to renegotiate to offer a larger amount to your creditors.
But you have to remain realistic.
When you can’t afford to pay more than you’ve offered, and your creditors still refuse to settle the debt, the next step is to refer your financial issue to a specialist.
A licensed insolvency trustee can provide debt relief plans, such as a consumer proposal and personal bankruptcy.
Their programs will immediately stop all creditors’ actions.
If you’re hiring a brick wall with your debt settlement negotiations, or unsure how to proceed to convince creditors, give our trustees a call at (877) 879-4770 to arrange for a free consultation.