Negotiating Bad Debt Settlements
People in general always try to repair their disputed credit through the process of disputing the credit agencies alone. However, there is also an alternative for repairing credit, and that is through legalization of debt and a preventive endorsement.
How this process works:
If any credit holder gets to know that there is an accurately listed negative account in his/her credit report, it basically becomes high time for repairing the credit, though two separate things can also be done.
* Offer an incomplete settlement for total satisfaction or rather offer monthly expenses with a restraining agreement to allow the liability to be informed as compensated once the ultimate payment is established.
Or
* One can also request for debt validation.
The methods:
First method-
One can begin by proposing around 30% of the entire debt as final payment, preferably in a written statement. Once the offer for settling the debt for a lesser amount is made and a certified mail has been sent, wait for the conclusive reply from creditor. If it is a yes, one should then make few copies of the signed contract while forwarding them the settlement amounts through money order. It is not recommended to use personal checks.
Second method-
This method does not include a fractional payment offer to be paid in a single payment, which is like settling a 5000.00 debt for 4500.00. This process means making settlement through payments. If the creditor at any time feels that there is no other absolute way to acquire the money from the consumer, they would rather like to receive payments, either the whole amount at once or a settlement bid.
This condition especially works well when the creditor presumes that the consumer knows about the expiration of the SOL (statute of limitations). So it is recommended to check the SOL occasionally. If, by any chance, the creditor becomes aware of the debt to be completely not collectible, SOL been expired; and reporting time has passed, then the consumer’s odds on improving the credit through settlement costs is quite well.
Draw up the offer for making payments with a limitation that as soon as the final payment is over, the account would be considered as paid. The ratings vary upon the creditor’s agreement but it would be better to take a charge off, a collection or a delinquent debt to the “paid.” If it is not entirely possible then the next near best rating will be “paid for a lesser amount” then moving to “settled for less” or rather “settled.” The ratings saying paid charged off, creditor disputes or paid collection, are those that would not work to the consumer’s favor.
The ultimate goal is to obtain the top rating. After all, this is why one is paying after the debit to start with. Remember to be very careful while dealing with the creditors and the collection agencies. They could be quite savvy and once you slip up, they could make the SOL renewed or worse.
George Burns is the co-publisher of Fixing Credit Score which be found at http://fixing-credit-score.blogspot.com/, a popular website that provides tips,
advice and resources that include How
To Fix Your Credit Score.
Free Credit Repair Book: Credit Secrets Mini-Book
Add comment February 20th, 2008
