Tips For Negotiating Debt Settlement Deals - Using Bankruptcy As A Threat

Feb. 10, 2011 - PRLog -- Looking for tips on how to negotiate debt settlement deals? Well, this is pretty natural and you are not the only one with the same quest. There are in fact millions others who need help with settlement negotiation. People still think that negotiating the dues is not a legal thing to do. This is however, a very wrong notion and you must know that the method is completely legal. The method of settlement makes use of the threat of bankruptcy as the major trump card. The method is described below.

Settlement as its first building block requires the consumer to have a minimum of $10,000 of unsecured loans. The next thing that the consumers need to do is to bundle all the loans in one place. Once this is done, the consumer needs to hire a settlement firm which is legitimate. The consumer will be advised by the negotiator to go delinquent and this is when the debt settlement letter is sent to the creditor. The settlement letter will have a well defined repayment plan.

The creditor will then wait for 3-4 months and sell off the debt to a collection company. The company will pay back only 20 to 30 cents on each dollar retrieved from you. This is a loss-deal for the creditor and the negotiator keeps an eye on when the deal takes place. As soon as the deal between the creditor and the collection agency is signed, the negotiator contacts the creditor with a different deal.

The negotiator sticks to the repayment plan in the settlement letter and says that the consumer can make a bulk repayment of 30-50% of the overall outstanding and only if the creditor wipes off the remaining and informs the credit bureaus as the debt paid in full, the consumer will do so otherwise, the consumer will file for bankruptcy. The trump card takes over! The creditor never wants the consumer to go for bankruptcy because, if the consumer files for bankruptcy, the creditor will lose all the money. A saying goes, "SOMETHING IS BETTER THAN NOTHING". The creditor will immediately compare the deal and will find that the deal offered by the negotiator is far far better than the deal with the collection agency.

The creditor agrees and forgives at least 50% of the outstanding for the consumer. The consumer then needs to repay the remaining amount of the money as per the new terms and conditions and gets out of the debts. This is how bankruptcy is used as a threat!

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.
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