What Lenders Look For in a Debt Settlement Negotiation

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.

Liberty Debt Relief’s Plan For a Happy (Debt-Free) Holiday Season

Credit Card Debt Relief Before it Even Starts

The holidays are known for being the best time of the year. For many people, however, that great time spent with family and friends can easily become expensive with the thousands of dollars people generally pour into gifts. This particular holiday is all about giving, but you should never allow that spirit to dictate your bank account. Instead, shop smarter, not harder this year and consider these Liberty Debt Relief secrets to success to enjoy the season of giving and avoid a season of Christmas debt.

Determine Your Budget

To avoid turning into Scrooge this year and calling off gift-giving altogether, take a look at your current financial situation. Budgeting is the first step in any financial decision, especially when you are looking into getting credit card debt relief, but this step does not have to wait until a few weeks before the holidays hit; you can start planning any time, even a year in advance.

For a debt-free Christmas, make a list of all the people for whom you want to purchase gifts — and consider adding a few extra no-names, just in case you forget one or two during planning. Then, look at how much money you expect to earn between your planning period and gift-giving season. Once you subtract your definite bills, expenses, savings, and general spending money, you will have what you are able to spend on everyone as a whole. You can then decide how you want to distribute that gift money for the people on your holiday list.

Planning your budget a few months or even a year in advance will allow you to put some money aside every month to avoid going into massive Christmas debt as soon as November and December hit.

Set Your Limits

Everyone has a different number of people they want to purchase gifts for and different relationships with those who do make the list. If you are already on the right track for credit card debt relief, the last thing you want to do is to show your love for these individuals by taking 10 steps back on your credit. If your budget will only allow you to spend $1,000 on gifts this year and you have a significant other, parents, in-laws, three siblings, five friends, and three co-workers to buy gifts for, look for meaningful items that won’t cost too much.

Try looking at sites and applications like Groupon, OfferUp, LetGo, the Facebook market, and even the clearance section of your giftees’ favorite stores to stay within your financial means. If you planned early enough in the year, you may even be able to find great deals for Memorial Day, Labor Day, the end of the season, and even Black Friday. It undoubtedly takes much more forethought, but being able to provide a loved one with a gift they love that also allows you to have a debt-free Christmas makes it well worth it.

Get Crafty

Many people deal with significantly lower budgets for gifts during the holidays, especially if they have worked hard all year to get credit card debt relief. Between decorating your home, cooking dinner and treats, and the endless gift-required parties that happen in November and December, staying under your gift budget can be difficult. Luckily, those who have a more crafty side can use their skills as an advantage in avoiding Christmas debt.

Many sites, such as Pinterest, offer great holiday crafting ideas that can save you tons of money. Investing $100 into crafts can result in gifts for as many as 15 to 20 people, depending on what you decide to create and where you purchase it from. Hundreds of stores offer low prices on crafting essentials and most of the items you will need are sold in bulk packages, making your expense list smaller. Scrapbooks, homemade ornaments, gift sets, sugar scrubs, wine bottle decorations, and candles are just a few of the thousands of ideas for debt-free Christmas gifts. Not only will creating some gifts save you more money overall, but it will also mean so much more to your loved ones that you dedicated the time to make them something special.

Spend on Socializing

Sometimes the best gift for loved ones is time well spent. If you have a large group of friends, bring up the idea of having a holiday potluck and movie night, a secret-Santa gift exchange, or even just a group outing to a restaurant, zoo, or local event. The idea will likely be appealing, especially for young adults who do not earn a large salary just yet or those who simply don’t have extra money on their credit cards while trying to get some debt relief.

Have a Debt-Free Christmas and a Happy New Year

The holidays don’t have to be stressful. A little bit of financial planning can go a long way in making sure that your Christmas debt stays minimal. This year, try setting a spending limit, looking into homemade crafts, and spending more time with your loved ones to share the true meaning of the holidays. Contact Liberty Debt Relief today for tips and strategies to save you money all year long.