The best part about DebtSmart.com, for me, is
when I get email from readers about their success. Amy and I have been
corresponding about her situation regarding settling a debt. When you
settle a debt, your goal is to negotiate with the creditor for a deal that
benefits everyone. For the debtor, this means reducing the balance and making
the payment terms reasonable. For the creditor, it means larger payments and a
guarantee of payment in a specific amount of time.
The trick is knowing how low the bank will go
when dealing with them or their third party representatives (debt collectors).
Typically, I’ve found that you can, on your own, get the amount down to about
50% of the original balance. However, the bank will usually want that settlement
amount in one payment.
In my latest book,
Talk Your Way Out of Credit
Card Debt, I present one chapter (chapter 7, no joke intended) where I
negotiated a settlement for a friend. This chapter includes all the phone call
transcripts from those negotiations. I was able to get the bank to 55% with one
payment, which I thought to be pretty good. I am thrilled to report that a
reader of my book and DebtSmart Email Newsletter was able to beat those
Amy originally contacted me to let me know about
her success in general. We corresponded a few times regarding
her latest negotiation with her credit card bank. She already was doing well, so I asked her to
let me know what happens--and she did! I must say that I am very impressed by
her success and want to share it with everyone at DebtSmart.com so all can see
what is possible when you are persistent! Congratulations Amy, and thank you for
allowing me to share this with everyone!
Here’s her story, in her words:
My debt was $35,215 and I called to explain that
we thought we had to declare bankruptcy because we didn't have any other
options. I let them explain other options, blah, blah, blah.
Then I told them that currently, we only had 25%
($8,803.99) and didn't think that was enough to settle. They came back
with--THAT is a really low offer, but they would settle at 45% ($15,800). All I
could say was " I know, I know" that's why we are looking at Bankruptcy.
The attorneys handling the debt collection have to "go back" to
the bank (or
so they say..) to see if they will accept the offer and they were able to
"present it" even though it was a very low offer (25%). I said, “Hey, it doesn't
hurt to try.” This gave me my low starting position, which I think helped me to
get to 40% in the end.
The bank came back with $15,000 flat, and then the rep
said that they would POSSIBLY accept $14,000. I left a message later in the day
saying that I could go to $10,000, but could make all the funds available within
10 days. They didn't call back. So two days later, I called just to confirm that
they got the message. They did and continued to stick to the $14,000. I offered
$13,000 with the funds available immediately and they stuck to $14,000. I was
done and took the $14,000 (39.8%), but am paying in 3 installments--$7,000 in a
couple of days, $3,500 in 30 days, and $3,500 in 60 days.
Hope this helps. I will continue to let you know
how I do.
book is great!!
Informative and encouraging
for some folks. I'm not that big a fan of
negotiating down one's debts. I've never been in a
position where it was necessary for me, so perhaps I'm
viewing this from an ivory tower of sorts. It's just
that I've always tried to live within my means, and not
charge a bunch of stuff that I couldn't (ultimately) pay
for. Amy might well have been painted into a corner by
medical bills or whatever, and I'm certain that I'd
change my position if that happened to me. I'm
definitely a DebtSmart fan. I especially appreciate the
techniques of a) monitoring your credit b) moving debt
to lower-rate accounts."
Very informative and eye
opening--shows persistence to keep negotiating and
knowing when it was the final offer and repaying the
amount on their own terms. DebtSmart has come a long way
baby....it has grown not only in subscribers but in
those who now are educated about financial matters. I
can see a better world because of all the information
you help with. Thanks for a wonderful job and a growing
family we all learn from."