Past-due debt is nothing to put off for another day. The sooner you take proactive steps, the less stress you will have in your life. While the final amount may be too much to cover at once, options exist to negotiate significant amounts of debt to much lower balances.
The benefits are numerous. The remaining debts can be paid down at a quicker rate and potentially increase your credit score.
The negotiation process
Insight can help to secure the best payment plan possible. Don’t be surprised if your original creditor sells the past-due account to debt collection agencies. Their goal is to remove that amount from their ledgers and reap the tax benefits.
Collection agencies purchase debt for the proverbial “pennies on the dollar,” whether it involves credit cards, loans, and utility and cell phone bills. That critical piece of information can be of value in negotiations. Their goal is to at least break even with somewhat of a profit (up to 50 percent). Reputable credit agencies adhere strictly to their respective state’s statutes of limitations.
Preparation is key
Preparing for a negotiation requires attention to detail and knowing exactly what you owe. Either you can gather this data or ensure that, by law, creditors provide the information within five days of reaching out to you. Information to have on hand includes:
- Original debt amount
- Contact information of the original creditor
- The date that debt was deemed delinquent
If evidence exists that the debt is not yours, you have 30 days to dispute it. Should that dispute be accurate, the collection agency must cease and desist any further efforts and immediately take it off your credit report.
Information is power. Before negotiating down, know what is a reasonable repayment or settlement plan. You may be pleasantly surprised, not to mention receive the relief from the stress that comes from carrying past-due debt.