3 Main Debt Settlement Strategies You Must Know
When we browse through the internet, we are able to find tons of articles and information related to debt settlement. However, do you really keep all the tips in mind when you are managing your debt issues? Some comments are confusing and misleading. To make things easier, there are only 3 main strategies you need to bear in mind when you are settling your outstanding balances.
Strategy No.1 - Select the Right Timing
In common, most lenders or creditors will never settle the debtors' outstanding balances until they have fallen behind on their payments for more than 3 months. The duration has proven that the debtors are really unable to make their payments due to certain reasons, such as job loss, accidents, serious sickness, etc. On the other hand, creditors also fear that they fail to collect their debts if 6 months have passed. In general, the creditors usually write off the debts or sell the debtors' accounts to the debt collection agents after 6 months. Hence, the best time for the debtors to negotiate for debt reduction is between 3 months to 6 months. Seriously speaking, it is indeed hard to deal with harassing debt collectors if there is no action taken after 6 months.
Strategy No. 2 - Debt Settlement Letter & Agreement
When the debtors start approaching their creditors, they are advised to put their request in words. Contacting the creditors through phone calls is not sufficient. The debtors need written proof to show their effort. Once the settlement proposal is accepted, the creditors are required to provide a written agreement to the debtors before payment is made by the debtors. All the written documents are the key tools in the settlement process as they will serve as important proof when there is any dispute.
Strategy No. 3 - Understand the Fair Debt Collection Act
All the debtors must know the law clearly so that they can avoid unfair treatments and false claims. In general, many creditors or debt collectors tend to threaten the debtors. By knowing the rules and regulations, the debtors' rights will be well protected.
Although debt settlement affects your credit score badly and you need to pay tax for your forgiven debt, this financial solution is still popular as it helps people to become debt free effectively. You are reminded to place your priority in getting rid of your debt as poor credit can be fixed later.
Strategy No.1 - Select the Right Timing
In common, most lenders or creditors will never settle the debtors' outstanding balances until they have fallen behind on their payments for more than 3 months. The duration has proven that the debtors are really unable to make their payments due to certain reasons, such as job loss, accidents, serious sickness, etc. On the other hand, creditors also fear that they fail to collect their debts if 6 months have passed. In general, the creditors usually write off the debts or sell the debtors' accounts to the debt collection agents after 6 months. Hence, the best time for the debtors to negotiate for debt reduction is between 3 months to 6 months. Seriously speaking, it is indeed hard to deal with harassing debt collectors if there is no action taken after 6 months.
Strategy No. 2 - Debt Settlement Letter & Agreement
When the debtors start approaching their creditors, they are advised to put their request in words. Contacting the creditors through phone calls is not sufficient. The debtors need written proof to show their effort. Once the settlement proposal is accepted, the creditors are required to provide a written agreement to the debtors before payment is made by the debtors. All the written documents are the key tools in the settlement process as they will serve as important proof when there is any dispute.
Strategy No. 3 - Understand the Fair Debt Collection Act
All the debtors must know the law clearly so that they can avoid unfair treatments and false claims. In general, many creditors or debt collectors tend to threaten the debtors. By knowing the rules and regulations, the debtors' rights will be well protected.
Although debt settlement affects your credit score badly and you need to pay tax for your forgiven debt, this financial solution is still popular as it helps people to become debt free effectively. You are reminded to place your priority in getting rid of your debt as poor credit can be fixed later.