Will Debt Settlement Affect Your Credit Score?

When you inquire about a debt settlement with your creditors, you have the opportunity to eliminate your monthly payments. What’s more, the outstanding balance on your credit cards is often cut dramatically.

So how can you take advantage of this opportunity?

Ask.

Although you might be afraid to request a debt settlement from your creditors, you’ll likely be rewarded for your efforts.

If a settlement is agreed upon, there’s a chance your creditors will inform the credit bureaus. For those people who already have poor credit, this reporting isn’t a huge issue. However, if you have credit card debt and good credit, you may want to instead consider a new budget or a line of credit to consolidate the money you owe.

What You Need to Know to Prepare for the Process

Before contacting a creditor, first determine how much you can put toward your debt. Partial payments are not usually accepted. As a result, you may need to dig into your savings or request money from family/friends.

The amount creditors will accept is up to their discretion. Your chances for a lower settlement decrease the longer you’ve had the debt.

In some instances, a creditor will make an offer before you have a chance to state your proposal. In these cases, you can either accept the debt settlement or attempt to negotiate further.

Of course, coming up with a debt settlement is faster over the phone. But if speaking makes you nervous, go ahead and negotiate by e-mail or snail mail. In all cases, be sure to document every interaction in writing.

The Advantage of Hiring a Debt Settlement Company

Companies specializing in debt settlements are familiar with the process and have already developed relationships with creditors. Professional firms know who is willing to accept the largest cuts on your outstanding balances – and what creditors are not willing to negotiate at all.

The bottom line: You will save time using a debt settlement company.

If you need help developing a debt settlement or debt negotiation strategy, please contact us today for a free, no-risk consultation.