DEBT SETTLEMENT or DEBT NEGOTIATION
You make an offer to your lender to pay off 30% to 50% the current balance you owe. This is pre-collection agency. This process can take 6 months or more and it’s not for the weak of heart.
How it works:
So let’s say your monthly payment is $400 a month on a balance of $4000. You stop making the $400 a month payment to the bank and instead you put the money into a “debt settlement saving fund”. Once you miss the first payment your phone will start ringing. The bank will call non-stop to check on the late payment. You will need to not make a payment for about 6 months or more for this to work, so ride out the wave of constant calls. It will get brutal trust me.
Fast forward six months and you should have $2400 saved in your “settlement fund”. Around this time you will contact the bank and let them know you would like to settle the account and offer to pay a lump sum payment of $2400 right now if they close the debt on the $4000 you owe. Many banks will take this because they know the chance of them collecting the full amount is slim. They will make more money on this debt if they settle with you now, rather than passing it off to a debt collection agency. The Debt collection agency will take up to 25% of what they collect as their fee. If you can time the settlement right and have a good amount of money to offer in the settlement you will look rather attractive to the bank.
You repeat this process with each of your debts, one at a time. Using each past settlement as leverage to induce the next bank to accept the settlement offer. The process is not a quick fix and will take you getting used to abusive calls from the bank.
Pros:
Your debt could be gone in about two years
Avoid bankruptcy
Gets your life back on track
Legal
Your credit lines will be closed
Cons:
Your credit will take a nose dive during settlement.
Many have a moral issue not paying what they owe
You will be under siege by the banks trying to collect their money
Not for everyone.
Open yourself to a lawsuit
Your credit lines will be closed
Recent Comments