| If you are serious
about restoring your credit, creditor-direct work should commence as soon as you see
your first set of credit reports. Creditor-direct requires a lot of time and street
smarts. You will be dealing with savvy negotiators in powerful corporations. You will
often be discouraged, denied, and blamed, but you must not be intimidated. Remember, if
you make the same request enough times within any corporation, you will eventually get
what you want. Settling Your Debts
Many times we have been asked, "Can I just
delete the negative listing without paying the debt?" In most cases, the question
comes from someone attempting to dishonestly escape a financial obligation. While it is
true that negative debt listings can be deleted from the credit report - even while the
debt remains unpaid - it is also true that these listings stand a good chance of
reappearing on the credit file sooner or later. There is a better alternative than
attempting to escape the debt.
You can create a true win-win
situation by settling the debt with the creditor. It is our experience that the
average consumer settles a debt for about 75 cents on the dollar. It is also our
experience that a professional negotiator will settle an average debt for about 60 cents
on the dollar, including their fee. There is rarely a good reason to attempt
your own debt settlement. Creditors will not take you half as seriously as they will
take your attorney. Handled properly, you will save time and money by seeking a good
attorney to negotiate with your creditors.
Understanding the True Risks and
Realities of Overdue Debts
Most
consumers overestimate the risk involved with overdue debts. They worry about possible
repercussions such as wage garnishment and property seizure by their creditors. When the
debt relates to a secured property, such as an automobile or a home, the
possibility of repossession is serious, but unsecured debts, such as credit cards
and deficiencies are much less pressing.
In fact, very few creditors will push all the way to a garnishment on a
relatively small unsecured debt. Garnishment and seizure are a creditor's most
terrifying weapons used to collect past due debt, but they are expensive and
time-consuming. Even if the creditor went all the way to recover the debt, they probably
wouldn't be able to recover enough to offset their collection costs. There is little risk
of a creditor taking an unsecured debt past simple collections.
It is important to remember, however, that the creditor would
be in his rights to get a garnishment and seize property, even for a small debt. There
is some risk of financial reprisals when a debt goes unpaid. Many consumers fold
under the perceived strain of unpaid debts. Hundreds of bankruptcies take place in
the United States each week for amounts under $5000.
These consumers are so intimidated by their creditors, that they
flee to bankruptcy, even though bankruptcy can bring total financial devastation for at
least the next ten years. If these same consumers had simply waited, and ignored the
threatening letters and telephone calls, they would have realized that their creditors
were all bark and no bite. Bankruptcy is the best option for a few consumers, but it is
much over-used. And, when a consumer files for bankruptcy, everyone loses - especially the
creditors.
The risks of judgments,
garnishments, and property seizures must be properly balanced against the likelihood that
such drastic collection measures will ever happen. The risks, and the decision to take
that risk, are entirely yours if you're in such a position.
Which Debts Can Be Settled?
An unsecured
debt is a debt where there is no collateral. Unsecured debts include medical bills,
credit cards, department store cards, personal loans, collection accounts, student loans,
amounts remaining after foreclosure or repossession, and bounced checks. Most unsecured
debts can be settled. But, utility companies generally won't settle for less than the full
balance. There are some few creditors, who will never compromise, but most will take a
less-than-full payment as settlement in full to close a troublesome account.
Secured, collateralized debts, such as a home or automobile, are
another story. If the creditor can simply repossess the property, why should he negotiate?
You can often renegotiate a short payment relief with a secured debt, but don't attempt to
settle the account while you still possess the property.
Also, the creditor must have a good
reason to want to settle. If the account is paid current, and there is no recent history
of late payment, it will be difficult to convince the creditor that it is in their best
interest to settle. This should not be read as a recommendation that you stop paying your
current bills. If you stop paying your current bills, you will almost certainly make your
credit situation worse. Perhaps bad credit is not an issue for you at this point and you
feel you must stop paying your bills in order to settle them and get back on top of your
debt load. If this is the case, you make such a decision at your own risk.
Order the
Full Kit and Learn
- Proven methods of getting the upper hand when
disputing with your Creditors.
- Learn to use
settlements to restore your credit.
- How to phase your approach.
- A proven template letter to send to
your creditors that gets great results.
Order the Full Kit Today |
