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Settle your Debts with Original Creditors, Save Money
and Repair your Credit
by Lisa Phillips
and Repair your Credit
by Lisa Phillips
Before you begin the process of settling your debts it is imperative that you find out who you
are dealing with, the original creditor or a collection agency. Settling debts with original
creditors differs from settling debts with a collection agency. The best way to find out if your
account is still with the original creditor is to simply give them a call.
are dealing with, the original creditor or a collection agency. Settling debts with original
creditors differs from settling debts with a collection agency. The best way to find out if your
account is still with the original creditor is to simply give them a call.
2. Lump sum payment – start Low on your offers.
A good starting point would be fifty percent (50%) of your total debt if you pay in a lump sum.
Fifty percent of the total debt is a fair and reasonable offer considering you were probably
paying way too much in interest anyway. Request to have penalties and extra interest
dropped. Most creditors will do this. You may have to ask for a supervisor or manager if you
are told “no” in response to your offer. Make sure you get a signed settlement agreement or
release when you settle for less than the full amount. The release should clearly state that the
lump sum payment excuses you from any and all remaining balance.
3. Partial repayment over time.
If you cannot pay a lump sum, it may be harder to negotiate settlement for less than the
amount owed. The creditor may insist you pay100% of the debt if you pay over time. If this is
the case request any late payments be deleted from your credit reports. You want to get
something out of the deal. Request your credit reports be updated to “paid as agreed” “never
late”.
4. Rehabilitate the debt.
If you are past due on a credit card or loan some lenders will allow you to rehabilitate your
account. Rehabilitation is a process by which lenders erase negative marks from your credit
reports once a series of on-time payments have been made consecutively. Usually lenders
require at least 6 to 9 consecutive on-time payments in order for the negative marks to be
deleted. Rehabilitation is not something lenders generally offer, you will have to request it.
5. Stick to your bottom line.
If your offer to a creditor is low and the creditor counter-offers another amount do not split the
difference. Some creditors will propose that you split the difference between a their higher
demand and your lower offer, do not agree to it. In this instance, take the “split the difference”
number as the new top number and offer an amount between that and your original offer.
6. Be patient and determined.
In an attempt to settle your debts, creditors may insist that the number they offer is the lowest
possible offer and that it is final. Don’t believe them. You can always call back at a later time
and get someone totally different who is willing to settle for your desired amount. Remember to
always politely ask for a higher authority and be patient.
7. Get your agreements in writing.
Original creditors may not want to put negotiations in writing. Insist on any settlement in writing
and get a signed release This is your proof. If you settle for less than the total amount owed,
make sure the creditor signs a release stating that your partial payment releases you from any
remaining balance.
8. Negotiate a favorable credit rating.
Request a “deletion” for an account that you settle in full. If your creditor does not agree to a
deletion then request a “paid as agreed" or even “settled" credit rating. Any one of those
ratings would be better than “paid charged off”. Also make sure the creditor is settling the
entire amount of the debt and not charging off the remaining balance. Get it in writing. If the
creditor will not budge on giving you a favorable rating still negotiate a settlement. You can
challenge the listing later directly with the credit bureaus as “paid, never late”. Often you will
get a favorable outcome.
Settle Debts with Collection Agencies. Learn to how settle debts for pennies on the dollars
with Collection Agencies.
Can’t pay your bills anymore? Get 100% online debt relief with CareOneSM Debt
Consolidation.
A good starting point would be fifty percent (50%) of your total debt if you pay in a lump sum.
Fifty percent of the total debt is a fair and reasonable offer considering you were probably
paying way too much in interest anyway. Request to have penalties and extra interest
dropped. Most creditors will do this. You may have to ask for a supervisor or manager if you
are told “no” in response to your offer. Make sure you get a signed settlement agreement or
release when you settle for less than the full amount. The release should clearly state that the
lump sum payment excuses you from any and all remaining balance.
3. Partial repayment over time.
If you cannot pay a lump sum, it may be harder to negotiate settlement for less than the
amount owed. The creditor may insist you pay100% of the debt if you pay over time. If this is
the case request any late payments be deleted from your credit reports. You want to get
something out of the deal. Request your credit reports be updated to “paid as agreed” “never
late”.
4. Rehabilitate the debt.
If you are past due on a credit card or loan some lenders will allow you to rehabilitate your
account. Rehabilitation is a process by which lenders erase negative marks from your credit
reports once a series of on-time payments have been made consecutively. Usually lenders
require at least 6 to 9 consecutive on-time payments in order for the negative marks to be
deleted. Rehabilitation is not something lenders generally offer, you will have to request it.
5. Stick to your bottom line.
If your offer to a creditor is low and the creditor counter-offers another amount do not split the
difference. Some creditors will propose that you split the difference between a their higher
demand and your lower offer, do not agree to it. In this instance, take the “split the difference”
number as the new top number and offer an amount between that and your original offer.
6. Be patient and determined.
In an attempt to settle your debts, creditors may insist that the number they offer is the lowest
possible offer and that it is final. Don’t believe them. You can always call back at a later time
and get someone totally different who is willing to settle for your desired amount. Remember to
always politely ask for a higher authority and be patient.
7. Get your agreements in writing.
Original creditors may not want to put negotiations in writing. Insist on any settlement in writing
and get a signed release This is your proof. If you settle for less than the total amount owed,
make sure the creditor signs a release stating that your partial payment releases you from any
remaining balance.
8. Negotiate a favorable credit rating.
Request a “deletion” for an account that you settle in full. If your creditor does not agree to a
deletion then request a “paid as agreed" or even “settled" credit rating. Any one of those
ratings would be better than “paid charged off”. Also make sure the creditor is settling the
entire amount of the debt and not charging off the remaining balance. Get it in writing. If the
creditor will not budge on giving you a favorable rating still negotiate a settlement. You can
challenge the listing later directly with the credit bureaus as “paid, never late”. Often you will
get a favorable outcome.
Settle Debts with Collection Agencies. Learn to how settle debts for pennies on the dollars
with Collection Agencies.
Can’t pay your bills anymore? Get 100% online debt relief with CareOneSM Debt
Consolidation.
Related Topics:
The credit card company will let you know if they have
forwarded your account to a collection agency. If the
original creditor still has the debt, they will more than
likely be very happy to deal with you. However, you
may not get a huge savings as you would with a
collection agency.
Original creditors can be less flexible when it comes to
debt settlement. However you do not have to be the
best negotiator to settle your debts because you have
the best leverage, the money the creditors want. Start
your negotiations low, get everything in writing and
follow these tips below:
forwarded your account to a collection agency. If the
original creditor still has the debt, they will more than
likely be very happy to deal with you. However, you
may not get a huge savings as you would with a
collection agency.
Original creditors can be less flexible when it comes to
debt settlement. However you do not have to be the
best negotiator to settle your debts because you have
the best leverage, the money the creditors want. Start
your negotiations low, get everything in writing and
follow these tips below:
1. Wait to settle your account when it is at least 60 to 90 days in arrears.
Creditors have access to your credit report and they can see how you pay all of your bills. If
you are current on most of your debt and just behind on debt with them, then they will be less
likely to negotiate a settlement. There is no incentive for them to settle because you are
handling your other debt. Do not stop paying your other bills in an attempt to convince your
creditor to settle.
Creditors have access to your credit report and they can see how you pay all of your bills. If
you are current on most of your debt and just behind on debt with them, then they will be less
likely to negotiate a settlement. There is no incentive for them to settle because you are
handling your other debt. Do not stop paying your other bills in an attempt to convince your
creditor to settle.
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