It is true that a consumer is able to work with his or her creditors to settle outstanding debts without the aid or assistance of an attorney. But, like attempting a car or home repair, attempting to settle your debts without knowing precisely what you are doing can leave you in a worse position than when you began. Debt settlement agreements are meant to provide benefits to both the debtor and the creditor, but do-it-yourself debt-settlers tend to make mistakes that rob them of the benefits these agreements provide.
If you are considering attempting to settle your debt yourself, be aware of the following mistakes and pitfalls:
• Not getting the agreement in writing: This seems like such a simple step, yet many individuals negotiating their own debt settlement fail to reduce the agreement they reached to a written contract. This contract (which should be signed by you and an authorized representative of the creditor) is your protection in the event that you hold up your end of the bargain but the creditor does not. If the creditor is not willing to prepare and send you a written contract after you have agreed to settle your debt, prepare one yourself and send it to the creditor via certified mail. Make sure that the contract (whether prepared by you or by the creditor) has all of the material terms and promises of the agreement. Insist on having the contract signed before you make any payments to the creditor.
• Not having your late payment information removed: If your creditor is a debt collection agency, you may be able to negotiate to have any negative information the agency reported to you removed from your credit report. While not all debt collectors and creditors will be willing to remove negative information from your credit report, it is worth at least asking. If the creditor or debt collector does agree to remove negative information from your credit report, be sure that this promise is stated clearly in the written agreement you and the creditor or debt collector sign. After you have paid according to the debt settlement agreement, pull a copy of your credit report to ensure the information has been removed as promised.
• Not negotiating the lowest settlement amount: Creditors and debt collectors would often rather get paid something on an outstanding debt rather than nothing at all. Many do-it-yourself debt settlors go into a debt settlement believing that they are in the inferior bargaining position and that the creditor or debt collection has all the bargaining power. Instead, recognize that you have something the creditor or debt collector wants: money. While it is unlikely you will be able to settle a $1,000 debt for $1, neither do you have to accept the creditor’s or debt collector’s initial offer. Like any negotiation, go into the debt settlement process with a clear understanding of what you can – and what you cannot – offer to the creditor. Do not be afraid to walk away and try again later if you simply cannot afford the creditor’s or debt collector’s “best offer.”
Consider Retaining an Experienced Debt Settlement Lawyer
An Arizona debt settlement attorney can help avoid these common pitfalls and mistakes, thereby helping you realize all of the advantages a debt settlement agreement has to offer. Your attorney is also likely to know what your creditor(s) and debt collector(s) will and will not accept in debt settlement agreements, thereby saving you from spending time and energy trying to negotiate a better deal with a creditor or collector who has already made its best offer. For more information on mistakes you are likely to make by settling your debt yourself please call our law firm so speak with an attorney or debt specialist.