Getting out of debt is difficult, especially if you do not have experience in doing so. Luckily, there are companies out there who are experts in this area and can help you get out of debt a lot quicker and easier. While there are many experts out there to choose from to help, the best debt settlement companies will have years of experience and will work closely with you and your lender to create debt settlement strategies that benefit all involved. We at Liberty Debt Relief specialize in these negotiations. Here are five of the strategies we use:
1. Working with the lender, not the collector
Before debt negotiation services even begin, your debt settlement expert will want to know exactly who your lender is, how much you owe them (and for how long), and who, if any, debt collectors have been contacting you. Rather than dealing with the collector, however, a debt settlement expert will work with the lender directly.
As is turns out, most lenders only resort to debt collectors when they can no longer get in contact with you and, as most companies do, they have to dedicate more time to other customers. The downside to this move is that using a debt collector to get your money actually costs lenders an additional fee. Settlement experts know lenders want to avoid that additional fee and will call them directly to sort out the situation, saving both you and the company money. This can also help leverage the negotiations and make your creditors more willing to settle.
2. Building long-term relationships with lenders
The best debt settlement companies maintain positive relationships with various lending companies. If they have a proven track record of helping consumers settle their longstanding debts, they also have a proven record of making sure lenders get the money they are after. Many debt settlement experts will have a direct contact at various lending institutions that they can get into a conversation with on your behalf.
Those relationships can often make it significantly easier to settle your debts quicker and easier because the lender knows that they have a higher chance of getting paid in a shorter amount of time.
3. Explaining your situation
Once debt negotiators begin working on debt settlement with the lender, their strategies take an emotional turn. At the end of the day, companies want their money, so they need a good reason why you are not able to pay up. Your debt settlement expert is the one who will use your financial hardship to make an impact on the company representative they are working with. Whether you went through a divorce, the person who earned most of the money in your home suddenly died, or you were laid off, your negotiator will make sure the lender knows how bad you are struggling but are truly wanting to pay the company what you can.
A debt settlement is only available if you are not making payments to your lender, usually from three to six months. If a company sees that you are still making regular payments, they are less inclined to settle because they can simply keep charging you interest and will fully expect you keep paying the adjusted amounts. However, by ceasing your payments altogether, you are showing them that you truly can’t make the payments and they would generally rather agree to a smaller amount altogether than for you to not pay them a dime.
4. Being persistent and ready to haggle
The key to a successful debt settlement is the negotiation. The best debt settlement companies will not be willing to take the first counter offer a lender provides them. Instead, they focus on you and what you can actually afford to settle for. Before even making an offer to your lender, they will sit down with you, look at your debts, income, and budget to help you come up with various payments and lump sums to pay your lender that are actually affordable.
In the best case scenario, a debt settlement expert will convince your lender to slash the debt by about 50 percent or more. However, not every lender will be willing to cut your debt by that amount, so the debt settlement company will also make sure to determine the optimum amount you can reasonably and definitively pay during a settlement. These negotiations may take a few months, but as long as your negotiator is persistent and consistent, there should not be a problem in getting the settlement you can afford.
5. Making an offer companies can’t refuse
The last and final step settlement companies take during their client’s debt settlement strategies is to make an offer to your lender that will benefit them in the long run. By this point, you have not been making payments towards the outstanding balance on your account and the one outcome that every lender wants is to receive some form of payment. Believe it or not, there is actually a limit for how long a company can keep you in debt, and if they do not receive your payment before then, they lose the money from you altogether (even though your credit will take a long, hard hit). Therefore, it is better for them to accept a smaller amount than to accept nothing.
Official debt settlements are also signed by you, the negotiator, and the lender to certify that all parties understand what is to happen. When you sign the settlement, you are agreeing to either pay a lump sum or to make smaller monthly payments with no interest for a few years until the new outstanding balance is paid off. There is also the agreement that you will make your payment to the lending company itself and not a debt collector, if one has been assigned to your case, so that the lender does not have to pay the collection agency additional fees.
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