5 Tricks You Need to Know When Settling Debts

settling debts

Settling Debts Isn’t as Hard as it Seems!

Dealing with creditors is not a pleasant experience for anyone. Debt is well-known for causing many serious issues for people from all walks of life. Family problems, hypertension, and drug usage are just three examples of the many problems that can develop when one falls into debt.

Settling debts is probably the best solution if you are seeking financial relief from your creditors. Fortunately, there are many effective measures available that can help you resolve improve your current financial status. Let’s take a close look at five tricks you need to know when settling these problematic debts.

Being Honest with Yourself

Being honest with yourself is the first step you need to take when it comes to settling debts. Unfortunately, thousands of people are unable to get their finances under control because they are in denial. You must accept the fact that you have a financial problem.

Consultation with an Experienced Debt Counselor

Having a consultation with an experienced debt counselor can pay off big dividends. Debt counselors are trained to help individuals get their debt under control. A debt counselor will be able to introduce you to your options. He or she can also help you create a reasonable payment plan with your creditors. You can use The Federal Trade Commission’s Guide to find a reputable debt counselor that is experienced in getting debts settled in your area.

Debt Validation

Creditors are well-known for selling delinquent accounts to bill collectors. Creditors are able to get a tax write-off and make a few bucks from turning delinquent accounts over to aggressive bill collectors. Creditors normally accept anywhere from five to ten cents on the dollar for each delinquent account. Bill collectors are only interested in paying a marginal amount for delinquent accounts because there is a strong possibility that they may not be able to recover any capital.

Bill collectors are notorious for using shady and aggressive tactics when it comes to collecting money. This is the primary reason why it is important for one to know his or her legal rights when it comes to dealing with bill collectors. Debt validation is one safeguard that protects consumers from scrupulous bill collectors.

You are entitled to send a bill collector a letter of debt validation. This letter forces the bill collector to prove that they have the legal right to collect the debt. By law, you are not required to do business with a bill collector if the company fails to prove that they have the legal right to collect the debt. A letter of debt validation is one simple and powerful weapon that should always be used when it comes to settling debt.

Make a Reasonable Offer

Creditors are usually open to making a deal with delinquent account holders for debt settlement. Thousands of people have experienced success with settling their debts by making reasonable offers to their creditors. A reasonable offer can help you wipe your financial slate clean and save a significant amount of money.

Your offer should compliment your current financial budget. The creditor may initially counter or reject your initial offer. You should not budge if you cannot financially afford to alter your initial offer.

You can always present your initial offer again after a short period of time if your creditor rejects your first offer. Statistics show that presenting a reasonable offer in the form of a letter will increase the chances of the creditor accepting the deal. Patience is a virtue when it comes to anything related to debt.

Financial Hardship

Some creditors are sympathetic towards individuals who are experiencing a financial hardship and need a debt settlement. Loss of job and death of a spouse are two prime examples of financial hardship. Proving a financial hardship is also another effective way of settling debts. A written letter showing your assets, income, and bank account amount can help you lower your outstanding balance dramatically.

Studies show that the current state of the economy is having a deep impact on millions of people. Many financial experts believe that more people will fall into debt as time progresses. Dealing with creditors can be a challenging experience for some people. The five simple tricks listed above can help turn the tide in your favor when it comes to settling debts in a timely manner.