If you regularly cringe at the mail and wonder how you’re going to pay old bills, you’re not alone. Millions of Americans struggle with old debt for a wide variety of reasons. Medical emergencies, job losses, and economic changes have made it very difficult for some of us to keep up. At the end of the day, we all know we need to get our old debts cleared away. The big question is how?
Negotiating Debt Settlements
There’s good news. You can negotiate or haggle with lenders the same way you would with anyone else. Debt collectors usually buy your debt for pennies on the dollar. It costs them even more money to pursue you to collect the balance. At some point, they have to consider the amount of the debt, the age of the debt, and whether or not it is going to cost them more than you owe to pursue the full balance. It’s ultimately in their best interests to work with you and negotiate a settlement.
Financial guru Dave Ramsey, in this short interview, guides a caller about how to negotiate an old debt she fears may end up in court. He explains exactly how the transaction between the original lender and the debt collector took place and why she’s in a good position to negotiate a settlement amount.
No one is saying you don’t owe the money you borrowed, but we do understand life happens and sometimes you simply need a fresh start. Begin your negotiations with a low offer, even if it’s just 10 percent of your balance. The lender may decline the offer and suggest another amount. You can go back and forth with them over the amount until you reach an agreement. They may take pennies on the dollar if you have to make payments, but your best option is to pay it off with one lump sum for the lowest possible rate.
Never start off with the highest amount you can pay. Like any sound financial business, debt collectors and lenders are used to people starting low and working their way up. If you offer the highest amount you can afford, the price is only going to get higher, not lower.
~Here’s to Your Financial Health!