When a person is in the process of reaching an agreement to resolve debt problems, there is always a chance of getting a negative impression in his future credit report. But on the other hand, this deal may also work to his advantage by clearly showing that he is taking the responsibility to pay for his debt. Thus, in his future credit report, it will be indicated that the amount of debt that has been settled is no longer outstanding. So how does one negotiate a settlement for debt collection?
- Calculate the capacity to pay. A person under a settlement agreement should never suggest an amount that he can’t afford. Once the budget has been reviewed, he may start to negotiate through offering much less. In addition, references, account numbers of bank savings or even the place of work must not be disclosed to a debt collector when negotiating.
- Notify the creditor who referred the debt if the collector declines any settlement. See if he is willing to discuss any terms that will help in reaching an agreement.
- It would be wise to request the debt collector to take away any negative information from the credit records that are related and have been added to the records from the time the debt collection was given to him. When done, the credit histories should not have any negative information.
- The deal must be put into writing. Before giving out payment, make sure that the important aspects of the deal have been written. A consumer lawyer may be hired to study the written agreement which should indicate the following:
- The amount to be paid;
- Method of payment, whether in lump sum or extended time;
- Mode of payment(s) like cashier’s check or through electronic bank transfer. Do not give personal check;
- The due date for payment;
- Exceptions that were granted by the collector;
- Agreement to notify the credit agency of the full payment once the amount has been received;
- Circumstances that infringe the agreement as well as the repercussions.
- Never sign an agreement that does not include everything that was agreed upon and until all details have been taken in. When a debt collector refuses to write the things agreed to, the payer can make the written agreement with his signature and then send this to the collector through certified mail, with a request for return receipt.
There is always an option of hiring the service of a consumer lawyer to do all the negotiating with a debt collection agency Toronto, especially if a considerable amount of debt is involved. This may impel the debt collector to just settle the debt for less.
In the long run, the amount that is not paid will be disclosed to the IRS as earnings, which means the debt settlement will oblige the debtor to pay more in income tax.