When you have reached the point where you need debt settlement, it is quite easy to get desperate and accept whatever deal is thrown at you by the settlement company or your creditor. However, you should not let this happen. It is important that you know what your options are and what some of the do’s and don’ts are in this line of negotiation.
· Be Proactive
Don’t wait until it is too late for you to come up with an action plan. As soon as you start falling behind on payments and you realize that you cannot make the payments, decide on what you are going to do. Do not just sit around waiting and hoping that the creditor is going to go away on their own.
Your creditors will be more willing to talk about what payment options you can pursue as long as your debts haven’t been written off yet. This is because they do not want to risk losing the whole amount you owe them. So, contact your creditors quickly and negotiate favourable repayment plans.
· Be prepared to prove your case
Your creditors will want proof that you are financially hard up and cannot afford to pay them. Therefore, they will demand to see your financial documents. This includes your income records, assets you own and all debts that you have.
They want you to prove that you are not just looking for an easy way to save money by avoiding paying the debt.
· Keep your promises
When negotiating a business debt settlement, make sure that you only negotiate terms that you are sure you can keep. If you promise higher payments than you can afford, you are going to default on the loan sooner or later. This will result in you being referred to a collection agency…
· Have a written agreement
Put everything in writing when dealing with the settlement company. This is to avoid any misunderstandings in future. A written agreement will also serve as a point of reference in case any issues crop up in the future. Do not start paying the settlement company a large amount of money when there are no records to prove that there is an agreement between you or that payment was made?
In case any of your creditors seek to make an improper collection in future, you will have records to show that full settlement was made.
· Don’t forget the tax consequences
Keep in mind that you will be required to pay some income tax on any of your debts that are forgiven. Ignoring this could see you get into tax debts, which you may not be able to get rid of even if you file for bankruptcy.
There are various options that you can pursue in regard to getting rid of your debt. But if you have opted to go for debt settlement, just know that many creditors are open to this option and they would be willing to negotiate with you.