Negotiating your account in 5 steps
The most important thing to remember when
negotiating is that 90 percent of the time, you have the upper hand. I know it
may not always seem like it, but it’s the reality of it. This is because you
have something the creditor wants, the almighty dollar!
Prior to offering a settlement you’ll need to get organized. That’s the first and most significant step! If you’re a debtor who has 10 or more accounts, then you’ll definitely need some sort of system for keeping track of everything. Some accounts may take longer to settle than others, and it can be difficult to remember the last conversation you had with a collector or what offer you made.
Prior to offering a settlement you’ll need to get organized. That’s the first and most significant step! If you’re a debtor who has 10 or more accounts, then you’ll definitely need some sort of system for keeping track of everything. Some accounts may take longer to settle than others, and it can be difficult to remember the last conversation you had with a collector or what offer you made.
I suggest creating a separate file for each account. When you’re ready to start, grab the most recent statements, separate them into file folders and mark accordingly. From there, every time you receive a collection letter, file it in the proper folder. When you have a conversation with a creditor, write down your notes and file them. When you get the account settled, file the settlement letter and any proof of payment in the corresponding folder. For those tech savvy folks, you can always use whatever program works best for you, whether it’s Outlook, Word, or Excel, just make sure that you also have a paper file for any documents that you receive.
The next step is to figure out your finances. When you have roughly 25-30 percent of the balance, on an account you’re looking to settle, you should consider making an offer. Even if you only have 10 percent of the balance you can still make an offer; however, they’ll most likely counter with a higher dollar amount. Settlements as low as 10 percent have been offered by creditors through the mail, but are generally sent on older accounts. Remember, there are always exceptions to the rules.
I know I keep saying this throughout the book, but I want to make sure you really got it!
If
you offer a lump sum amount of money versus payments, you’re more likely to get
your offer approved. But, before we get into dollar amounts you’ll need to know
some basics.
There are two types of offers, one in writing and
the other over the phone. In addition, the method of offering a settlement will
vary depending on whether an original creditor, collection agency or a law firm
is handling it.
If you’re dealing with an original creditor or collection agency, especially the ones overseas (NOTE: you can’t miss the heavy accent) you can start by offering something very low, like 15 percent. American banks and collection agencies hire call rooms in India, or other countries, to handle their dirty work, because the wages in those other Countries are a lot lower than in the states. These call rooms, have highly aggressive collectors and sometimes, when you explain your situation, they could care less. All they’re looking for is your money. My recommendation, if you get an overseas collector that isn’t willing to help you on a settlement, is to call a local number for your bank or collection agency during the day. Try to get an American on the phone, because believe it or not, you’ll probably have more luck in getting the deal that you want.
If you’re making an offer to a law firm, I highly recommend you fax and mail a written offer, and then follow up with a phone call. If a law firm’s been retained to collect your debt, you should find out if they’re licensed in your state. This is important! There are many law firms out there that can’t legally practice law in every state due to lack of proper licensing.
An easy way to check if they’re licensed is to call and ask for the attorney’s name and bar number. If you received a letter from them, sometimes they include this information.
If you’re dealing with a law firm that can practice law in your state, you should know that the risk of having a lawsuit filed against you is greater. Of course there are variables to this. For example, if your account is past the statute of limitations for a lawsuit, then anything filed with the courts could immediately be dismissed, so long as you send the proper documentation.
STEP 1: How to
write a settlement letter
Being a good writer doesn’t come naturally to
everyone. Some of you were probably too busy doodling in your notebook, or
perhaps chatting it up with Sarah in the third row, rather than getting an A+
in English (this includes me). Thank God for the internet!
Writing a settlement offer letter can be daunting; however, it’s very effective in the negotiation process. No one likes to tell their sad, pitiful story about what happened to them and why they owe money. The good news is that a great settlement offer letter isn’t purely based off of a hardship story; it’s also about the cold hard cash. You know what they say, money talks! And that’s no joke.
So what’s a hardship? It can best be described as a time of suffering or distress. When people encounter hardships in life, the first thing that gets affected are their finances. When you write your settlement offer letter I highly recommend you include some hardship information. This is a way of pleading your case. A hardship can qualify as any of the following:
• Medical illness resulting in lack of work
• Medical bills
• Loss of job for you or spouse
• Reduction of income for you or spouse
• Reduction of hours at work resulting in decreased income
• Failed business
• Job or home relocation
• Death of a spouse or co-borrower
• Incarceration
• Divorce
• Marital separation
• Military duty
• Damage to property (Natural or unnatural disaster)
One of the most common misunderstandings that
consumers have, when writing their hardship letter, is thinking they deserve a
settlement. Let’s clear this up; it’s up to the creditor whether or not a
settlement is approved, not the debtor. Even with all that bailout money the
federal government doled out, the truth is, you’re responsible for 100 percent
of your debt. The purpose of the hardship letter is to convince the creditor to
accept your settlement proposal by explaining your situation. Hardship
information can play an important part in whether your offer gets approved or
not. When explaining your hardship you want to be careful about the information
you divulge. Too much personal information can work against you, while too
little, may appear like you don’t have a hardship at all. Here’s an example of
a poorly written hardship:
Dear Creditor,
I’m writing this letter to explain why I’ve become delinquent on my debts. I’ve done everything in my power to make ends meet, unfortunately, I’ve fallen short and would like you to accept $500 as a settlement on my account. My number one goal is to get out of debt. I got into debt after investing a lot of money into the stock market and then it crashed. This was the same year I got clean and sober from drugs and alcohol. I also let a friend borrow $30,000 to help him out; however, he hasn’t paid me back and I’ve been unable to reach him for over two years. Please accept my offer so I can become debt free.
Thank You,
Sincerely,
John Doe
Yikes! Where to begin? For one, Joe doesn’t explain why he can’t afford
his minimum payments, other
than a vague explanation of poor investments. Second, by explaining that he got
clean and sober is a perfect example of giving too much personal
information. Although he may think
it’ll help his case, it probably won’t. Here’s an example of a well written
hardship:
Dear Creditor,
My wife and I are currently experiencing a financial hardship. We understand we have a debt with your company and would like to work out a resolution. We are requesting that your company accept a settlement of $1500 on the above referenced account.
We have been having financial difficulties as a result of purchasing our home without a full understanding of our mortgage. A little less than a year ago our mortgage payment increased by $900 a month. We suddenly found ourselves unable to afford the payment and fell three months behind. We hired a company to help modify our loan, only to find out that the bank couldn’t approve us for any modification. Today, May 28th, is the official day our home gets foreclosed. We’re currently living with a family member until we find another place to live.
In addition, I had my hours cut at work. I went from a full time schedule (40 hours a week) plus 10 hours of overtime; to working only three days a week without any overtime. It’s either that or I have to quit my job. My company informed me this was going to be a temporary cut; however, it has already been eight months, and I see no change in sight. My wife is only able to work part time due to her disability. Her income, on average, is about $230 a week. We have two small children; her income mainly pays for food and day care.
Once our mortgage went up, and I had a reduction in hours, we were unable to keep up with the credit card payments. We have a total of $65,000 of debt. We are desperately trying to avoid bankruptcy and work this out on our own. As a result, we have been saving some funds and are offering the following:
$1500 available upon approval to settle our account in full and removed from our credit reports once final payment has cleared.
If we were able to pay more on all our accounts, frankly we would. Thank you for your consideration in this matter.
Sincerely,
Bob and Jane Smith
As you can see Bob and Jane Smith took the time to
explain, not only the reason why they could no longer afford their credit
cards, but also provided details regarding work and income. This is key.
Depending on a variety of factors, which I’ll go over, your letter should be
brief, or very thorough. A creditor will pay close attention to your
current financial situation when they receive your hardship letter. In some
cases, they may ask you to provide a copy of your paystubs, bank statements or
other personal documentation.
If you can avoid providing financial information, you’ll be better off. However, in some cases it may help you more than anything. For example; if your income is truly in the lower bracket, say around $2,000 a month or less, you don’t own any property, and are a single parent who works part time. This is ideal information to provide. In most cases, they could care less about your personal trials and tribulations. Providing personal information is a way for them to consider whether you’re a good candidate for wage garnishment, bank levy or a property lien.
NOTE: If you HAVE to provide documentation (usually with law firms) make sure you white out the important stuff like bank account numbers and place of employment.
In the above example, this woman probably wouldn’t qualify for wage garnishment due to her low income and being a single parent. I’ve personally seen the courts either waive a wage garnishment order or lower it to practically nothing for single/low income families. In addition, she doesn’t own a home which means the creditor has no option of a property lien. When it comes to a bank levy, she’s most likely living paycheck to paycheck; leaving her with little to no savings. Good luck getting money out of that bank account! Are you starting to see how this works?
The purpose of the hardship letter is to let them
know three things:
1. Why you couldn’t afford your payments, and any steps you may have taken to resolve the matter 2. Your current financial situation and any assets you own 3. How much money you have to offer as a settlement
You have to switch your thinking and put yourself in the creditor’s shoes. When you say “I only work three days a week” to them, this translates into “I’m not qualified for wage garnishment.” Get the idea?
In the hardship letter example I gave earlier, ‘Bob and Jane Smith’ touched on all three of the above points. They explained how their mortgage affected their finances. They didn’t put the blame on anyone but themselves. They explained their part time working schedule, which directly reflects their income. They explained their lack of assets (home was lost to foreclosure) and also stated how much debt they have, ($65,000.) All of the above is going to give the creditor a pretty good idea as to what kind of candidate this debtor is for possible legal action. As a creditor, I know I’d be lucky to get one dollar from a debtor in this type of financial rut.
Some websites or consultants may tell you NOT to include a settlement offer in your hardship letter, or they tell you to avoid the word “SETTLE” altogether. Let’s be real, the creditor can smell a settlement from a mile away when they get a hardship letter. Be clear about the purpose of your letter while also providing as much information as possible so the creditor can make the right decision, the one that’s ultimately in your favor! Here are some more tips for writing your hardship letter:
• KEEP IT SHORT: Try and keep your letter to one
page. A creditor isn’t interested in reading a novel or a sob story. You’ll
lose their attention, and they may never finish reading or considering your
situation. If one page isn’t enough, make it two but no more.
• GIVE YOUR FINANCIAL INFORMATION: Provide them with just enough so they can make a sound decision. This includes details such as; how much you pay for your mortgage (or rent), how much money you make every month, how many hours of work you put in, sources of income such as disability or unemployment, and so on. Don’t disclose where you work or volunteer that you have large amounts of money sitting in some savings account.
• BE POLITE AND COURTEOUS: As I stated earlier, some folks feel they’re entitled to a discount or settlement. They’re not. The simplicity is that they’re asking for one.
• MAKE IT PERSONAL: Realize that another person is going to be reading and considering your settlement offer, not a computer. Give as much detail as possible while also keeping it brief. For example, don’t be embarrassed by some medical condition, include all of the information, it could make or break a settlement deal.
• MAKE A CLEAR OFFER: Don’t beat around the bush when it comes to your settlement offer. Let them know exactly how much you have, down to the penny. The exact payment date(s), and any preferred method of payment.
• DON’T SOUND TOO EAGER: Realize some debts are so old that they would be more than happy to agree to your offer.
• GIVE YOUR FINANCIAL INFORMATION: Provide them with just enough so they can make a sound decision. This includes details such as; how much you pay for your mortgage (or rent), how much money you make every month, how many hours of work you put in, sources of income such as disability or unemployment, and so on. Don’t disclose where you work or volunteer that you have large amounts of money sitting in some savings account.
• BE POLITE AND COURTEOUS: As I stated earlier, some folks feel they’re entitled to a discount or settlement. They’re not. The simplicity is that they’re asking for one.
• MAKE IT PERSONAL: Realize that another person is going to be reading and considering your settlement offer, not a computer. Give as much detail as possible while also keeping it brief. For example, don’t be embarrassed by some medical condition, include all of the information, it could make or break a settlement deal.
• MAKE A CLEAR OFFER: Don’t beat around the bush when it comes to your settlement offer. Let them know exactly how much you have, down to the penny. The exact payment date(s), and any preferred method of payment.
• DON’T SOUND TOO EAGER: Realize some debts are so old that they would be more than happy to agree to your offer.
When getting ready to fax or mail your settlement offer letter, always
call ahead of time and find out the name and contact information for the
collector assigned to your account. Going online and grabbing the general fax
number from their website or sending your letter to some generic e-mail address
will get you nowhere. Include the contact information for the collector to
ensure it gets properly routed to them. If the collector has a direct e-mail or
fax, that’s even better. Once you’ve sent your settlement offer letter, wait.
If you don’t receive a phone call, fax or e-mail within 48 hours, follow up
with them. The goal of the initial settlement/hardship letter is to get the
creditor to agree to a dollar amount and then get a written agreement!
Some recommend that you send your own version of a settlement letter for them
to agree to and sign. I don’t recommend this. It doesn’t have the same weight
in court as a settlement agreement on their letterhead. If you’re not the best
at writing contracts, well, you could leave yourself open to all sorts of
future problems.
LAW FIRM VERSUS COLLECTION AGENCY: You should know that a law
firm will examine and determine your settlement differently than a regular
collection agency. I went over this before. However, try sending them a
hardship letter without financial documentation first. If they request documentation
then send it to them, if they don't, you shouldn't bother. Sometimes your offer
may be enough for them to waive any requirements, and they will simply accept
the offer. Here’s another example of a hardship letter:
{Your Name}
{Street Address}
{City, State, Zip Code}
{Phone: 000-000-0000}
{Month, Day,
Year}
{Debt
Collection Agencies Name}
{Street Address}
{City,
State, Zip Code}
{Phone:
000-000-0000}
Re: {Your
Name}
Account:
{Name of Delinquent Account}
Account#:
{Account or Reference Number}
Attn: (Name
of Debt collector)
Fax: (If you
are sending through fax)
Dear (Name
of Collection Agency),
Hello. My wife and I are writing this letter to
explain the unfortunate set of circumstances that have caused us to become
delinquent on our debts. We understand we have a debt with your company and
would like to work out a resolution. We’re requesting that you accept a
settlement of $
__ on the above referenced account.
My wife Carol was diagnosed with lung cancer in 2007. In late September of 2007, she had surgery and had a lung removed. Shortly after, she began chemo therapy and radiation treatment. Although she had medical insurance, it didn’t cover 25 percent of the medical debt. We now had over $75,000 in medical bills. As a result, we used our credit cards to keep her going on her treatments and stay afloat. I’m the only one working currently, and the money I make doesn’t cover our monthly expenses. In addition, I’ve had to take intermittent time off to be able to take care of my wife. We’re currently in default on our mortgage and have been attempting to work out a loan modification for months. However, the bank isn’t responding, and foreclosure looks imminent. We’re trying to avoid bankruptcy but have consulted with an attorney on the subject. Again, we’re offering the following resolution:
__ on the above referenced account.
My wife Carol was diagnosed with lung cancer in 2007. In late September of 2007, she had surgery and had a lung removed. Shortly after, she began chemo therapy and radiation treatment. Although she had medical insurance, it didn’t cover 25 percent of the medical debt. We now had over $75,000 in medical bills. As a result, we used our credit cards to keep her going on her treatments and stay afloat. I’m the only one working currently, and the money I make doesn’t cover our monthly expenses. In addition, I’ve had to take intermittent time off to be able to take care of my wife. We’re currently in default on our mortgage and have been attempting to work out a loan modification for months. However, the bank isn’t responding, and foreclosure looks imminent. We’re trying to avoid bankruptcy but have consulted with an attorney on the subject. Again, we’re offering the following resolution:
$1,500 available upon approval to settle our account in full “Paid as
Agreed”
Thank you for your
consideration. I can be reached at (000) 000-0000 to discuss this further.
Sincerely,
Your signature
Your name (typed)
---
STEP 2:
Negotiate your Credit Report
Many people think that debt settlement hurts your
credit. It’s not debt settlement itself that affects the score, its being
behind on payments. As a matter of fact, if you’re already late on most of your
bills and they’ve charged off, then most likely your score is in the dumps
anyway.
Every time you settle a debt your credit score gets marked with a slightly more positive rating than a charge off. Each credit reporting agency will have their codes for marking an account status; however, they’re similar. The credit report codes you should know are as follows:
Every time you settle a debt your credit score gets marked with a slightly more positive rating than a charge off. Each credit reporting agency will have their codes for marking an account status; however, they’re similar. The credit report codes you should know are as follows:
00 Not rated, too new to rate, or
approved but not used
01 Pays
as agreed
02 30-59
days past due
03 60-89
days past due
04 90-119
days past due
05 120
days or more past due
08 Repossession
8A Voluntary
Repossession
09 Charged
off to bad debt - Placed for Collection
When a settlement is complete a creditor will notify the credit bureaus
that the account is either:
·
Settled
·
Paid Not as Agreed
·
Paid
·
Remove it from your credit altogether
It greatly helps if you negotiate the terms of your credit while you
negotiate your account. You can always
ask a collection agency or creditor to mark it Paid as Agreed or have the
account removed altogether, but that doesn’t mean they have to do it. The fact is, you’re already
asking them to accept half the amount originally owed or less. It’s entirely up
to them how they want to mark the account, so long as it’s not a fraudulent
mark. You may have noticed,
earlier in my settlement offer letter example,
I wrote the offer as follows:
$1,500 available upon approval to settle our account in full “Paid as
Agreed”
If you don’t want it to be marked “Paid as Agreed” you can always ask
for something like:
A.
$1,500 available upon approval to settle our account in full and
account marked as “Settled”
B.
$1,500 available upon approval to settle our account in full and
Credit Report marked as “Paid”
C.
$1,500 available upon approval to settle our account in full and
account removed from credit history
Once you receive the actual settlement letter from
the collection agency pay close attention to the wording. They should disclose
to you what they decide to mark on your credit report. Although sometimes they
can be pretty vague like; “Once the final payment is received, please allow
30-60 day for us to contact the credit bureaus to mark your account
accordingly” or something or this sort.
If your credit score is important, take the time to negotiate the terms before any payment is made. Once again, don’t make any verbal agreements regarding the above. Get it in writing. If you discussed your credit with the collector and you both agreed on the marking, then make sure they include that in the terms of the letter.
Obviously option “C” of having the account removed from your credit would be ideal, however, the likelihood of that happening is slim. Of course, it never hurts to ask. My second option would be “B” having the account marked as PAID this just looks better than SETTLED or PAID NOT AS AGREED. If you’re currently paying accounts, such as a house or car loan, or are current on other credit cards, then your score should improve more rapidly than if you’re not. If everything on your report is delinquent, and you’re paying nothing currently, or on time, it’s going to be harder to get your score improved. To be truthful, I always imagined the credit bureaus just spinning a wheel when your name was called and whatever number it landed on, bam! That’s your credit score. Of course, that’s not the case. They have very sophisticated software that determines your score based off a number of factors. That’s another book in itself. Ok, moving on.
If your credit score is important, take the time to negotiate the terms before any payment is made. Once again, don’t make any verbal agreements regarding the above. Get it in writing. If you discussed your credit with the collector and you both agreed on the marking, then make sure they include that in the terms of the letter.
Obviously option “C” of having the account removed from your credit would be ideal, however, the likelihood of that happening is slim. Of course, it never hurts to ask. My second option would be “B” having the account marked as PAID this just looks better than SETTLED or PAID NOT AS AGREED. If you’re currently paying accounts, such as a house or car loan, or are current on other credit cards, then your score should improve more rapidly than if you’re not. If everything on your report is delinquent, and you’re paying nothing currently, or on time, it’s going to be harder to get your score improved. To be truthful, I always imagined the credit bureaus just spinning a wheel when your name was called and whatever number it landed on, bam! That’s your credit score. Of course, that’s not the case. They have very sophisticated software that determines your score based off a number of factors. That’s another book in itself. Ok, moving on.
STEP 3: Making
the first phone call
Alright! I hope by now you feel a little more
confident with your settlement letter writing skills. Let’s talk about the
follow up. If they don’t call within the first 48 hours, you can safely assume
your settlement offer didn’t interest them sufficiently, they’re too busy or on
some vacation somewhere soaking up the sun and sucking on some tropical drink with
an umbrella.
Don’t worry. It happens all the time. They know if a debtor takes the time to draft a settlement/hardship letter and get it to them that it’ll most likely be followed up by a phone call. Most of the time; those lazy collectors will pick up the phone and call only if your offer is too good to be true.
Before you pick up that phone, you need to sharpen your negotiating skills. Whether you realize it or not, you negotiate every day. Whether it be trying to get your kids to eat their vegetables, asking for time off of work, or getting your husband to do the dishes. Everything is negotiable, and that’s the truth. The problem is, people don’t know this ,and they just don’t ask. I can’t tell you how many times I’ve simply asked for a free slice of pie or a discount on my purchase and like magic, they agree. The trick is simple, don’t be afraid to ask.
Although I’m about to teach you how to negotiate your debt, feel free to use this precious knowledge in your everyday life. Let’s get started!
The moment you get the collector on the line, ask them if they received your fax or e-mail? If they say no, ask them if they’d like you to resend it. Not all of us have the greatest verbal skills, and if your settlement offer letter looks anything like my examples; it can do a lot of the negotiation work for you. If needed, re-send your letter and wait another 48 hours before following up again.
Once the letter has been confirmed as received, don’t be surprised if the phone call starts out with one of two scenarios:
• They’ll begin by asking some invading questions regarding your finances or personal affairs.
• They’ll cut right to the chase and inform you your settlement was rejected.
Don’t worry. It happens all the time. They know if a debtor takes the time to draft a settlement/hardship letter and get it to them that it’ll most likely be followed up by a phone call. Most of the time; those lazy collectors will pick up the phone and call only if your offer is too good to be true.
Before you pick up that phone, you need to sharpen your negotiating skills. Whether you realize it or not, you negotiate every day. Whether it be trying to get your kids to eat their vegetables, asking for time off of work, or getting your husband to do the dishes. Everything is negotiable, and that’s the truth. The problem is, people don’t know this ,and they just don’t ask. I can’t tell you how many times I’ve simply asked for a free slice of pie or a discount on my purchase and like magic, they agree. The trick is simple, don’t be afraid to ask.
Although I’m about to teach you how to negotiate your debt, feel free to use this precious knowledge in your everyday life. Let’s get started!
The moment you get the collector on the line, ask them if they received your fax or e-mail? If they say no, ask them if they’d like you to resend it. Not all of us have the greatest verbal skills, and if your settlement offer letter looks anything like my examples; it can do a lot of the negotiation work for you. If needed, re-send your letter and wait another 48 hours before following up again.
Once the letter has been confirmed as received, don’t be surprised if the phone call starts out with one of two scenarios:
• They’ll begin by asking some invading questions regarding your finances or personal affairs.
• They’ll cut right to the chase and inform you your settlement was rejected.
BE
PREPARED: I recommend writing down a financial breakdown before you call.
For
example:
MONTHLY
INCOME $3,000
RENT/MORTGAGE -$1,200
CAR/TRANSPORT -$400
INSURANCE -$120
UTILITIES -$200
FOOD -$300
PHONE/INTERNET -$200
CHILD
CARE -$400
________________________
LEFT
OVER MONEY -$180
I’m going to explain why you need the above in just
a second. First, there are three noticeable types of collection agencies out
there:
A. Law firm type collection agencies that sue
A. Law firm type collection agencies that sue
B. A regular collection agency with well trained
employees and procedures
C. Overseas call centers that collect on old debt
For collection agencies “A” and “B”, it’s best to cooperate and give them a general idea of your finances. You may not know this, but some collectors are punching away at their calculators while you rattle off your expenses. If you forget some expenses, it’s going to look like you have a lot of extra cash each month when in reality you may not. By writing everything down ahead of time, you can quickly answer their questions and save quite a bit of frustration.
If you’re trying to settle a debt with agency “C” and they ask for financials, you could just say “I’m sorry, but I’m unable to provide that information.” 90 percent of the time, they’ll simply say okay and move on. Try it! Having your financial information doesn’t necessarily help this type of agency. Usually your debt is too old for a lawsuit, and they know it. Cash is king! Stick to dollar amounts with overseas companies.
Ok, hopefully you can get the financial information out of the way so you can begin discussing the meat and potatoes. There are several tactics that play an important role in negotiations. As a matter of fact, what I’m about to tell you are basic sales techniques and overall street smarts. Using this information may greatly influence whether your settlement gets approved or not.
For collection agencies “A” and “B”, it’s best to cooperate and give them a general idea of your finances. You may not know this, but some collectors are punching away at their calculators while you rattle off your expenses. If you forget some expenses, it’s going to look like you have a lot of extra cash each month when in reality you may not. By writing everything down ahead of time, you can quickly answer their questions and save quite a bit of frustration.
If you’re trying to settle a debt with agency “C” and they ask for financials, you could just say “I’m sorry, but I’m unable to provide that information.” 90 percent of the time, they’ll simply say okay and move on. Try it! Having your financial information doesn’t necessarily help this type of agency. Usually your debt is too old for a lawsuit, and they know it. Cash is king! Stick to dollar amounts with overseas companies.
Ok, hopefully you can get the financial information out of the way so you can begin discussing the meat and potatoes. There are several tactics that play an important role in negotiations. As a matter of fact, what I’m about to tell you are basic sales techniques and overall street smarts. Using this information may greatly influence whether your settlement gets approved or not.
Bluff
Always offer a settlement percentage lower than
what you expect to get approved. When the creditor comes back and counters your
offer with something higher, inform them you “need to check with your spouse or
check your finances.” Essentially, you and the creditor are both bluffing. They
may tell you, “We can only accept 75 percent!” When in reality they can settle
for much less. This is a typical hook and bait technique. They’re throwing out
a line and waiting to see if you bite. By “checking with your spouse” you’re
really bluffing.
Take
your time - Stall
Be patient when it comes to settling debt. Some
accounts can be settled in a day while others can take months. Funny enough,
the dollar amount has no effect on how long it’ll take to settle. For example,
it could take you a month to settle a debt of $550, while a creditor may
approve your settlement on a $45,000 debt in one afternoon. Creditors know that
some debtors are desperate to settle their account as it could mean the
difference between getting approved for a new home or car loan. If you don’t
like their offer or they won’t budge, hang up and call back in a week or so.
Repeat as necessary until they accept your offer. By taking your time, you’re
being firm and showing the creditor you have the “luxury” of accepting their
offer or not. This shows you don’t need to settle but rather want to settle.
There is a big difference between the two. Some creditors only have a short
window to collect on an account before it goes back to the debt buyer or
original creditor. The closer you get to the end date, the more likely they’ll
be to accept your offer. It’s either that or nothing, and they know it!
Shut
Up and Listen
This technique always reminds me of an animal
circling around a writhing snake waiting to find just the right angle before it
strikes. Some people find it extremely difficult to just…listen. Most creditors
are accustomed to high stress and upset consumers. That’s a given. They’re used
to being cut off or hung up on and are quick to find a resolution while you’re
actually still on the phone. Everyone loves to be listened to; it’s not only an
ego booster but also creates a professional relationship. By listening rather
than talking, you’re letting the creditor know you’re not a threat and are also
giving him the opportunity to slip up and accidentally give you the information
you need.
In addition, I highly recommend you add some silence to the conversation. Wait…silence? Yes! This is an amazing trick. I love it, and have used it or had it used on me several times. I want you to try this. When a creditor tells you the approved settlement amount, don’t say anything, just wait five to 10 seconds. Keep quiet. Awkward, right? People hate this and are quick to say anything to alleviate the silence. In fact, the creditor will most likely jump in real quick and either bring down their offer or give you another option. If you want, wait even longer. This technique is bound to drive any creditor mad! Try practicing by adding silence to a conversation with someone you know. You may learn something new about them.
In addition, I highly recommend you add some silence to the conversation. Wait…silence? Yes! This is an amazing trick. I love it, and have used it or had it used on me several times. I want you to try this. When a creditor tells you the approved settlement amount, don’t say anything, just wait five to 10 seconds. Keep quiet. Awkward, right? People hate this and are quick to say anything to alleviate the silence. In fact, the creditor will most likely jump in real quick and either bring down their offer or give you another option. If you want, wait even longer. This technique is bound to drive any creditor mad! Try practicing by adding silence to a conversation with someone you know. You may learn something new about them.
Play
Dumb
This is probably the most important technique. By
playing dumb, you’re giving your opponent the impression that you’re not a
threat, which means they’ll usually begin to relax and may say things they
otherwise wouldn’t. People are more likely to help out a dumb person than the
smart know-it-all. Don’t be afraid to ask a lot of questions. Here’s a short
list of dumb questions you can ask that will undoubtedly give you the answers
you’re looking for.
Why?
Why
Not?
What
do you mean?
What
do I need to do?
Can
you tell me more about that?
Can
you tell me how it all works?
Seems
too simple right? A good example of a “Playing it Dumb” conversation would go
something like this:
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