Insider Secrets to Using Debt Settlement Law to Get Out of Debt Quick
You may have heard about debt settlement as an option when you don’t have enough money to pay off your debts. Their stories about people who have negotiated with credit card companies so that they only have to pay half of what they owed, and you may be thinking that this could work for you, too.
Debt settlement law is not simple, but negotiating with your creditors can be simple and very profitable. Here’s how you can quickly and easily settle your debts for less money than you ever thought possible.
The first step is to get the mailing address for the debt collector. You should not contact the debt collection agency by phone for any reason other than to get their mailing address. The reason for this is simple: phone calls are harder to document. With letters, you can keep them all on file as proof in case there is any argument over what they’ve promised you.
The second step is to send them a letter requesting proof that you owe the debt that they say you owe. Make sure that they send proof that you owe the debt before you proceed to the next step. After all, you want to make sure that you’re not paying on a debt on which the statute of limitations has expired, a debt that you just plain don’t owe.
The third step, once they’ve proven that you owe the debt, is to send them a letter saying that you don’t have much money, but you’d like to pay at the minimum part of the debt you owe. Make an offer to pay them 25%, or less, of the original amount of the debt.
If you owed $4000, say, “I have $900 that I have accumulated over the past several months. It may be a long time before I have this much money again, so I’d like to use it to pay off my debt to you, if possible. If you are willing to accept this as complete payment of my debt, I will send it to you closest. Please let me know as soon as possible.”
The meaningful words here are “accept as complete payment of my debt”. You want them to agree that this payment will satisfy your debt, and release the complete amount of your debt. Unless they agree to that, don’t send them a cent.
They will probably reply with a counter-offer for more money. Using standard negotiation techniques, you can either stand firm with your original offer, or give them a slightly higher counter-offer.
The older your debt is, the greater chance that they’ll settle for less, because they have less expectation that you’ll ever pay the debt. This works in your favor, especially if you drag out the negotiations. Remember, they want your money (probably) more than you want to pay off the debt.
Another thing to keep in mind is that if they’re a debt collection agency, they’ve purchased the right to collect your debt for approximately 7-10 cents on the dollar. This method that they have plenty of room for negotiation while nevertheless making a profit.
Once they’ve made a firm written offer that you agree with, send them your payment via certified mail, along with a copy of the letter detailing their offer. Make sure to include your account number on your check or money order, so there can be no “confusion” on their part.
You’re probably thinking, “But what if they sue me?” I’m no lawyer, but a quick review of debt settlement laws indicates that already if they win a lawsuit against you, the most you’re likely to have to pay is your original debt amount plus court costs.
The good news is that they won’t always win, and they’ll avoid going to court unless it’s worth their while. They also probably won’t be awarded any punitive damages unless you show that you acted in bad faith or attempted to avoid paying your debt.