Settling your debts with the creditors is the wisest way out, by which you
can clear your financial backlogs and get out of debt burdens. It is thus one
of the most important factors to negotiate with them in a convincing manner
and make sure that they agree on an affordable settlement plan.
When does the Creditor say 'yes' to debt settlement?
Creditors are often seen to agree with debt settlements because they feel it
is their only way to get back their money. The creditors feel that some amount
of money is better than nothing. Don't ever bear the misconception in your mind
that the creditor has agreed to settle your debts because he is basically a
Another indirect way by which you can influence the creditor to
settle your debts is by hinting, that bankruptcy is the only other option left
for you. However, it is not easy to convince them all the time. The creditors
have their own ways to determine the authenticity of your financial condition.
What makes the creditor say 'no' to debt settlement?
There are several factors for which the creditor might disagree to settle the debts:
You are current on your payments:
If the creditor finds
that you are in a good standing for all the accounts of your credit report,
then it is almost impossible to convince him of a debt settlement
. If you warn the creditor of some future happenings like loss of job or medical emergency
they hardly get convinced. There is a fair chance to convince them if you
have a valid documentation which shows that your financial situation is insecure.
Your account has been active recently: Recent activity
in your account like making charges and payments may make your creditors increase
your settlement amount to a considerable extent.
Low settlement over an extended period: There is a limit
to lowering and stretching your payment scheme. Most creditors will not agree
to go for a 30% settlement offer payable over five years. They feel cheated
and don't have any idea of what prevents you from sparing such a small amount.
In such cases they want to avoid another hassle with your account. In case
you offer them a full payment settlement offer they might agree over an extended
Sue you to recover the money: Another case where the creditor
can refuse to settle debts with you is, if they have a legal upper hand to
sue you. If they suspect you of making big bucks or enjoying a lot of assets,
they have the right to drag you to court and garnish your wages. This can
be done in less money than making a deal with you. Most probably you will
be sued under such conditions.