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Sunday, September 20, 2020  
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8 Good Rules of Thumb for Debt Settlement

Kristy Welsh Kristy Welsh is the founder of CreditInfoCenter.com and author of Good Credit is Sexy.

Making the decision to start the debt settlement process is a big one, so make sure you go into it prepared. “The last thing you want to do,” says CreditInfoCenter.com’s Kristy Welsh, “is get the ball rolling only to discover it’s moving in the wrong direction.”

1. Put everything in writing
Avoid phone calls with collection agencies altogether. Not only can the reps be bullies (and who needs that stress?), but phone conversations don’t carry the same weight as a written debt settlement agreement.

2. Send it registered mail
This is the only means you have of proving that the collection agency received your communication.

3. Keep your cool
Never communicate a sense of desperation or urgency to settle your debt. The more you imply you’re willing to take your time, the better.

4. Offer to settle for no more than 25 percent of the debt
Most collection agencies only get pennies on the dollar for the debts on their books. Getting 25 percent of the debt from you still makes them a tidy profit.

5. Ask for the negative listing to be removed from your credit report
Once your debt is paid in full, there is nothing to stop a collection agency from removing the negative listing from your report. You have to ask. Get it in writing.

6. Get terms in writing before making a payment
If you have negotiated a deal with a collection agency, make sure you have a letter outlining the agreed-to terms.

7. Pay in one lump sum
Collection agencies may try to talk you into making payments on your debt. They will not only charge you interest, but it may also restart the statute of limitations. Save up and only start the debt settlement process once you have a lump sum!

8. Keep good records
Record every communication you have with the collection agency, including dates and types of correspondence.

This entry was posted in Credit Cards, Debt Negotiation. Bookmark the permalink. Read more articles by Kristy Welsh. (Also see articles by all authors and articles in all categories.)



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