Working out how to pay off your debts is no easy task and most of the time you end up having to do it without the benefit of specialist knowledge. Like the majority of people with debts, you end up muddling through, sometimes making things better, and sometimes making them worse. So when you first do your research on all the different ways to pay back debt and come across debt settlement, it sounds so simple you get excited. Your creditors agree to your debt settlement proposal and you can look forward to getting up to 80% of your debt written off and walking away.
In reality however nothing could be further from the truth. Creditors are intent on getting you to pay 100% of the debt by any means possible regardless of the stress and heartache they cause you. If you have never had to negotiate a debt settlement, chances are you're about to play right into their hands. The following are some of the pitfalls that can happen if you are inexperienced at dealing with the tactics of unscrupulous creditors and have a go at a DIY debt settlement.
Taking your cheque and not giving you a settlement
Even though you spoke to your creditor on the phone and they agreed to your debt settlement, they end up going back on the deal. You send them a cheque with your debt settlement offer letter and instead of confirmation that your debt is paid off, you get a letter thanking you for the payment and requesting a date when the rest will be paid.
Deadlines you are not supposed to meet
You have 14 days to accept a debt settlement offer from your lender. Trouble is, the letter is dated 12 days ago and the postmark shows your creditor didn't put it in the post until the day before. You have only two days to get it back to them and because you've been at work all day you've already missed the post for the day. You get your acceptance posted off the next day, you're your creditor 'claims' it didn't arrive in time so they assumed it was unacceptable to you. They demand 100% of their money back. You have to start all over again.
Misinterpreting terms and conditions
While writing letters to your creditors you try and make them sound formal and professional, but you haven't realized some of your comments could be open to misinterpretation and provide a loophole for your creditor to use to back out of agreements. For example, you promise to pay your creditor a sum of money on a particular date. You initiate a BACS transfer on that date, which will take three days to clear. Your creditor then claims you broke the terms of your agreement as the funds were not cleared on the date you specified. They thank you for your payment and demand the remaining balance of your debt.
Tying you up in knots on the phone
You're faced with a rude aggressive creditor who claims you lied on your original application form and threatens to take you to court. Frightened and believing you must have filled in the form incorrectly by accident, you agree to whatever they want. Only when you get off the phone do you realise you've been lied to. Your copy of your application form shows you filled it in correctly and the creditor lied to scare you into agreeing to their demands.
Hassling your friends and family
Thanks to the generosity of 73 year old Great Aunt Nelly you're finally able to offer a debt settlement to your creditors and get rid of the debt that has been dragging you down for years. Enthusiastically you tell your creditor Aunt Nelly's offer and they sweetly ask for contact details to arrange the debt settlement payment directly with her. Suddenly Nelly starts getting nasty phone calls requesting she pay for the full 100% of the debt. She rings you in tears claiming the last call was so bad it set off her angina and she's going to scrape her life savings together to pay off the whole debt and get rid of them.
You can't be faint of heart when you tackle the negotiation of a debt settlement. Creditors will do anything they can to get their money - preferably 100% of it - and they will employ nasty unscrupulous tactics to do so. If you have a strong stomach and can avoid falling prey to them, DIY debt settlement can be good move and save you thousands on your debt. But if you think you'll be brow beaten or taken advantage off, don't attempt it.
In reality however nothing could be further from the truth. Creditors are intent on getting you to pay 100% of the debt by any means possible regardless of the stress and heartache they cause you. If you have never had to negotiate a debt settlement, chances are you're about to play right into their hands. The following are some of the pitfalls that can happen if you are inexperienced at dealing with the tactics of unscrupulous creditors and have a go at a DIY debt settlement.
Taking your cheque and not giving you a settlement
Even though you spoke to your creditor on the phone and they agreed to your debt settlement, they end up going back on the deal. You send them a cheque with your debt settlement offer letter and instead of confirmation that your debt is paid off, you get a letter thanking you for the payment and requesting a date when the rest will be paid.
Deadlines you are not supposed to meet
You have 14 days to accept a debt settlement offer from your lender. Trouble is, the letter is dated 12 days ago and the postmark shows your creditor didn't put it in the post until the day before. You have only two days to get it back to them and because you've been at work all day you've already missed the post for the day. You get your acceptance posted off the next day, you're your creditor 'claims' it didn't arrive in time so they assumed it was unacceptable to you. They demand 100% of their money back. You have to start all over again.
Misinterpreting terms and conditions
While writing letters to your creditors you try and make them sound formal and professional, but you haven't realized some of your comments could be open to misinterpretation and provide a loophole for your creditor to use to back out of agreements. For example, you promise to pay your creditor a sum of money on a particular date. You initiate a BACS transfer on that date, which will take three days to clear. Your creditor then claims you broke the terms of your agreement as the funds were not cleared on the date you specified. They thank you for your payment and demand the remaining balance of your debt.
Tying you up in knots on the phone
You're faced with a rude aggressive creditor who claims you lied on your original application form and threatens to take you to court. Frightened and believing you must have filled in the form incorrectly by accident, you agree to whatever they want. Only when you get off the phone do you realise you've been lied to. Your copy of your application form shows you filled it in correctly and the creditor lied to scare you into agreeing to their demands.
Hassling your friends and family
Thanks to the generosity of 73 year old Great Aunt Nelly you're finally able to offer a debt settlement to your creditors and get rid of the debt that has been dragging you down for years. Enthusiastically you tell your creditor Aunt Nelly's offer and they sweetly ask for contact details to arrange the debt settlement payment directly with her. Suddenly Nelly starts getting nasty phone calls requesting she pay for the full 100% of the debt. She rings you in tears claiming the last call was so bad it set off her angina and she's going to scrape her life savings together to pay off the whole debt and get rid of them.
You can't be faint of heart when you tackle the negotiation of a debt settlement. Creditors will do anything they can to get their money - preferably 100% of it - and they will employ nasty unscrupulous tactics to do so. If you have a strong stomach and can avoid falling prey to them, DIY debt settlement can be good move and save you thousands on your debt. But if you think you'll be brow beaten or taken advantage off, don't attempt it.
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Remember negotiating with creditors for debt settlement can be a daunting task. If you are going to undertake DIY debt settlement be sure to do your research first.
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