Tips When Negotiating a Debt Settlement

While it may not seem like it, you have many options when you owe a significant amount of debt you cannot afford to repay. Of these, debt settlements are one of the most common. A debt settlement is an agreement between you and a creditor or debt collection company in which you repay a portion of the debt with the other portion being forgiven. Creditors and debt collection companies are often amiable to agree to a settlement because they would rather obtain a portion of the debt rather than none of it at all.

Negotiating a debt settlement on your own can be intimidating. This is particularly true if you have not negotiated such a settlement before. Below, our Florida debt lawyer outlines some tips that can make it easier.

Determine if a Debt Settlement is Right for You 

Truthfully, creditors and debt collection companies may already be somewhat reluctant to work with you if you have owed them debt for a long period of time. Once you enter into a debt settlement agreement with them, they may not be willing to give you another chance if you miss one or more payments in the future.

Calculate how much you owe, and the amount of time it would take to pay it off, with and without a debt settlement in place. If you owe too much, or it will take far too long to pay it off, you may need to consider other options, such as bankruptcy.

Determine How Much You Can Repay 

If debt settlement is right for you, the next step is to determine how much you can repay. Keep in mind that the amount you repay overall should be more than 50 percent of what you owe. Making a lump sum payment upfront can also show the creditor that you are willing to work hard to make payments and restore some good faith between you. If you make a lump sum payment, it should be equal to 30 percent of the outstanding balance.

Know Your Rights 

Hopefully your creditors and debt collection companies will negotiate in good faith, but that is not always the case. To ensure they do, it is important to understand your rights under the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act. Knowing your rights under these two sets of laws can give you more leverage when negotiating.

Start Low

 There is very little chance that creditors will accept your first debt settlement offer. As such, you should start with a figure that is lower than what you are actually willing to pay. This provides you with some room to go higher when the creditor counteroffers, or when it is time to make another offer that is higher than your first.

Contact a Debt Lawyer in Florida 

It is possible to negotiate a debt settlement agreement on your own, but this does not mean that you have to. At Nowack & Olson, PLLC, our Florida debt lawyer can negotiate favorable terms on your behalf and draft an agreement that ensures the settlement is legally binding and will not cause disputes in the future. Contact us to schedule a consultation and to learn more about how we can help.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0559/Sections/0559.72.html