Are you in the midst of a settlement negotiation?
If so, you might be wondering how much you can reasonably settle your debt for. After all, the process isn’t as straightforward as some make it out to be.
But the good news is you can likely settle for much less than you’re anticipating.
Here’s how much you should offer, and why.
How Much Should I Offer In a Settlement Negotiation?
Somewhere between 25 and 50 percent, in most cases. So if you owe $5,000, somewhere between $1250 and $2500 should work.
While that’s only a fraction of the balance owed on the original debt, you might be surprised at how much money you can save by negotiating.
But the truth is, once your debt goes to collections, the people attempting to collect are instructed to take less money.
In some cases, the company you owe money has already sold your debt to a creditor for pennies on the dollar—which means they are basically looking to make any profit they can.
Morally speaking, don’t worry about settling for less than you owe, either. So long as you aren’t intentionally gaming the system to make debt settlement a part of your financial strategy, that is.
The key to making a settlement negotiation work at 25 to 50 percent is preparedness. You need the right amount of cash on hand, as well as a few tools in your box to ensure the debt collectors don’t dissuade or discourage you.
Having the money on hand is key.
If you’ve ever spoken to a debt collector, you know they can be aggressive. They are trained to do this. If you match their energy by saying you have cash on hand, right now, you may be in luck.
If they agree, get it in writing.
Tricks to Avoid
Debt negotiations can be tense. But you can settle your debt by approaching the call with these tricks in mind.
Don’t Give Out Bank Info
Absolutely do not give them access to your bank account. Tell them you’re willing to pay via a cashier’s check—or put that money on a Visa Gift Card and pay them that way.
Unfortunately, some creditors will dupe you into believing you’ve settled. But the language on the sheet they send won’t say “Final” payment. Legally, there isn’t much you can do.
Don’t Give Into Scare Tactics
Debt collectors won’t usually raise their voices. But they may be rude, mean, or even make you feel like a bad person for not paying your debt. In most cases, they are being instructed to do this by their boss.
(They contribute significantly to the Banking/Financial Services turnover rate, which is almost 17 percent.)
If you get nervous or find the conversation isn’t going so well, get off the line. You can call back another day to try and collect your debt—and ignore their calls if they keep calling you.
You truly need a cool head to make this work.
Debt settlement negotiations can be intimidating, but most agencies will take 25 to 50 cents on the dollar to settle your debt. Be sure to get it in writing and offer the money right then. The key is to fight fire with fire.
Learn more about our debt settlement program to see how it works today.