Meeting Debt Obligations | Hiring a Debt Negotiator | Make Additional Income with Hobbies | Extra Revenue Through Recycling
Hiring a Debt Negotiator
“Settle your debts for pennies on the dollar!” This can be a tempting cry for people facing financial trouble. Debt negotiators are popping up everywhere. These negotiators claim that paying them can save you lots of money while getting creditors off of your back at the same time. Are the claims true?
Who Can You Trust?
In many states, debt negotiators do not need a license. That means someone can literally set up a website tomorrow and call themselves a “debt negotiator.” There are even people selling kits online which tell people how to become “debt negotiators.” Some negotiators can get reasonably good deals for their clients. Some negotiators do know what they are doing. Unfortunately, it is difficult to tell the good negotiators from the bad ones.
Taking Yourself Out of the Loop
Most debt negotiators will have you sign paperwork that gives them permission to handle your debts. Once this is done they usually advise you to stop communicating with your creditors. You might not hear anything until the negotiator comes back with an offer. So long as you keep hearing offers you might assume the negotiator is doing a good job.
Here’s what the negotiator may not be telling you. He is likely to hit a brick wall with at least some of your creditors. If he is particularly confrontational or incompetent he may even have angered your creditors. The existence of a negotiator will not stop a creditor from pursuing legal action. It is in the negotiator’s best interest to let these creditors sit, however. Since you are no longer communicating with your creditors. you might not realize that this tactic is not working until the process server shows up on your doorstep.
You Can Do This Yourself
Every collection agency has some sort of guidelines about what sorts of settlements they can make, and for whom. These guidelines might vary slightly with the identity of the original creditor, and some creditors just do not accept settlements at all. There is nearly always a floor on settlement percentages, as well. Although the floor offer rarely drops below 40% of the balance, most of the time the collector is allowed to accept closer to 60%, or even 70%, of the balance. These guidelines do not change just because there is somebody different on the phone. At best a skilled negotiator is going to get the agent right to the floor, but that is as good as it gets.
Debt negotiators make a percentage off of the amount they save you, so depending upon the details of the settlement, you might actually end up paying far more than you would have paid had you handled the negotiation yourself. The percentage-of-savings commission (which is extra revenue the negotiator can make by securing the lowest possible settlement amount), also causes many negotiators to dig in their heels over offers that no company will accept. Negotiators who do not know the industry are often certain they have the upper hand and that the creditor will cave if they are left to wait long enough. After all, the negotiator's commission on 30% of $1000 is going to be far higher than it will be on 70% of $1000. Unfortunately, few companies respond well to a “let them wait” approach. At best, these companies will just hold on to the debt until the negotiator goes away. At worst, they’ll pursue legal action against you instead.