Debt Payment Plan & Effort: What Lenders Look For in a Debt Settlement Negotiation

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Getting out of debt is a long process that takes a lot of patience and flexibility. Negotiations can take several months for you and your debt settlement consultant to complete, but if you know exactly what to expect and what the other party you are negotiating with expects in return, you can make the process shorter and easier to get started on your new and improved path to financial freedom. Before you enroll in a debt payment plan or another kind of debt settlement program, the key to success is to know how to negotiate with creditors for debt settlement.

That You Truly Cannot Afford to Pay Your Debt in Full

One of the very first things your lender will look for when you decide to negotiate your outstanding balance is if your history with them actually shows you need a restructured payment. They will look at what your total balance is, how many payments you have made, how long it has been since the last payment, your current income, and your most recent credit report. Pulling this information will let them see what your current situation is and how it has changed since you originally opened an account with them.

In many cases, lenders are much more likely to allow a debt payment plan if they have proof you cannot afford your current payments and balance. If you have missed several consecutive due dates or have proof of financial distress, your lender is likely to help you settle the debt.

They Still Want You to Pay at Least Half of What You Owe

One of the key things to remember is that your lender will not just give you a complete free pass on your outstanding balance. As nice as that would be, lenders are companies and companies still have to make money. Before entering negotiations, set a reasonable amount you can pay. This should range from about 25 percent to 50 percent. If you have a good debt settlement consultant helping you, there is a good chance you can cut the amount you owe by 50 percent, but you should always be prepared to pay more than you would want to in the ideal situation.

When an amount is decided upon, you should also be prepared to finalize how you will pay back that amount. You can always choose to pay the new outstanding balance up front and in full, but if you are not able to do so, as many people are, you can likely create a new debt payment plan that better fits your budget. Choosing to do the former will likely result in a lower amount that you owe because the company will receive more of your money sooner, while doing the latter will likely make it so you can repay the new amount within a few short years.

They Want You to Avoid Bankruptcy so They Still Get Paid

Filing for bankruptcy is not just a bad situation for you; it is bad for your lenders as well, and they will usually do everything they can to help you avoid this. If you do file, you may lose many of your assets and ruin your credit. Understanding how bankruptcy impacts the people you borrow from is a great way to better negotiate with your creditors for debt settlement.

While you usually do not want to tell your creditor that you are thinking about filing for bankruptcy right off the bat, it is a good thing to keep in mind as negotiations progress. Most debt settlement negotiations can take several months, and if you and your debt consultant strategically explain your financial situation, your lender will likely help you come to a better settlement solution.

Firm Negotiations with Reasonable Expectations

At the end of the day, a successful debt settlement negotiation relies on reasonable expectations. Never go into a negotiation process expecting that all of your debts will be eliminated, because a company is not able to get away with losing thousands of dollars, especially when considering the millions of people who are considering debt settlement every year. You should also keep in mind that negotiations are not complete in a single day. Even the most experienced debt settlement consultant needs time to look over every inch of your finances and set up times to meet and speak with you and your creditors.

Throughout the entire process, make sure to stay consistent with your expectations of your debt settlement consultant, the lender, and of your situation overall. As long as you can maintain patience and stay firm in what reasonable results you hope to accomplish, you will likely have a positive result that makes both you and your lender happy.

Know What to Expect for a Successful Outcome

Before you ever enter a debt settlement program or begin looking for a new debt payment plan with your creditors, you should know exactly what to expect of the process. Doing so will ensure that you create a reasonable plan and can prepare for the process financially, mentally, and emotionally.

Contact Liberty Debt Relief today to get connected to a debt settlement consultant who can provide you with more information and is experienced in how to negotiate with creditors for debt settlement.

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