Debt consolidation tips

Tips to consolidate debt

Although you can certainly attempt to negotiate directly with your creditors, it's probably not really a good idea if you don't know what you're doing. You could end up doing more harm than good. To successfully negotiate settlements, here are a few things you absolutely need to know:

• Settling debts is not always about what you know, but often who you know. Getting to the right person and avoiding the uncooperative people can make all the difference between settling and not settling.


• Creditors and collection agencies are not usually going to write off hundreds or thousands of dollars without a fight. So you better have a thick skin and be willing to persevere...sometimes for several months.


• You must use different negotiating strategies with different financial institutions and collection agencies. What works with one, will usually not work with another.


• Creditors routinely threaten litigation. But how do you know whether the threat of a lawsuit is REAL or just a BLUFF? We've learned that past performance of a creditor or collection agency is the biggest determining factor. Therefore, you need to know the "profile" of the creditor or collection agency you're dealing with to know if the threat of a lawsuit is credible.


• What if one of your accounts is referred to a law firm? Does that mean you're getting sued? Not necessarily. Although we are NOT attorneys, we negotiate settlements with law firms all the time. You just have to know what you are doing.


• You have to know what constitutes a good settlement offer and what's not a good settlement offer. For example, a 50% settlement might be a good offer with one particular creditor or collection agency, and not a very good offer with another.


• Should you attempt to settle directly with the creditor or let the account go out to an agency? Believe it or not, there are times when you are better off by letting the account go out to a collection agency!