Debt settlement is definitely not a walk in the park. You will go through a lot of trying times in the process and you have to understand the repercussions on your credit score. Not to mention the finance-related stress that you will experience.
Although it is your attitude that will give you the determination, patience and discipline to get you out of debt, your knowledge of how to accomplish it will also play a role. Apart from studying how to negotiate a debt settlement, you should also understand your opponent.
Creditors are not out to get you for personal reasons. It is the nature of their business to get you to pay off your debts. It is a return of their investment after all. You can expect that from any business. While you may think otherwise, they are not the bad guys here. Your debts are your responsibility and asking you to pay them back is part of their right.
Understand that while your creditors seem to concentrate on getting you to pay, they have other concerns too. Their foremost concern is to get their parent company to earn - usually, these are larger bank and financial institutions. These establishments have shareholders and your creditors want to keep them happy by keeping the stock value at its highest. Lower stocks would mean lesser revenues and dividends. These stocks suffer when people start defaulting on their payments and end up not paying for their whole debt altogether after filing for bankruptcy. Credit card companies want to avoid this as all cost. That is why most debt settlement companies advise their clients to extend their patience.
Creditors do not want your debt to be charged off because that is a reason for stock values to go down. This is what drives them to accept settlement offers. When you have this in mind, you will understand how you can effectively approach your negotiating strategy.
Another important factor that you need to look into is bankruptcy. You may be wondering why your creditors are very hesitant to have you file for this debt relief option. In truth, this is the worst case scenario for the credit card company. If you qualify for a Chapter 7 bankruptcy, the chances that the creditor will not get a single cent is very high. That also means they are prohibited from going after you ever again - at least for the debt that had been discharged. Even if the debtor has properties that can be liquidated, credit card debts are among the last to be paid off - if there is any left at all.
These are the reasons why the threat of bankruptcy and delayed payments are encouraged during the debt negotiation process. You may be averse to missing payments due to its credit damaging consequences but remember that creditors have other reasons to hate it as well. They don't want their parent company to lose money through lowered stocks so they get aggressive in their collection efforts. If they start bluffing on lawsuits, threaten them back with bankruptcy.
Bottom line is, knowing what is important to your opponents will allow you to use the right cards during negotiation. There is still the risk of them saying no - especially if your payment defaults will not really affect their stocks (e.g. dealing with large banks, lower number of debtors defaulting on payments, etc).
Just stick to your financial crisis story and hint the possibility of bankruptcy consistently. Be polite yet firm in your stand. More importantly, never agree to settle for an amount that you cannot afford. If things get too complicated, you always have the option to hire a professional to work with you.
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