Will debt collectors settle for less? This is a great question that has many moving parts to it. We will quickly break it down in this article, however, please note that we have written an article series dedicated to this topic. You can find it here: Debt Settlement
The short answer to this question is yes. Debt collectors will settle for less depending on your circumstances.In saying that, if you are struggling to pay your debt and are considering settling with your debt collectors you absolutely should get in touch with a professional. In most instances, debt settlement is not going to be your most effective method of becoming debt-free.
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The main factors that debt collectors look for when considering a settlement are as follows:
Late Payments – Typically speaking, if you are at the debt collection phase, you have already missed payments. Usually, the more payments you miss, the more likely a debt collector is going to be willing to settle for. After you speak with a professional, and they agree that debt settlement (sometimes known as informal settlement) is your best option, you will typically want to stop making payments to the collection agencies or continue to not make payments.
Your offer – As we have explained in our article series on Debt Settlement creditors typically want to receive a lump-sum of cash. They don’t really want to settle and take monthly payments on this. For a strong offer, always go with the lump-sum route. It should be noted that it is because of this consideration that many people cannot make debt settlements work.
Your Personal Means – If you let a creditor know that you could pay this off tomorrow or make monthly payments large enough to satisfy them they most likely won’t settle. Typically, the worse your situation is, the better a settlement you can obtain.
Of course, this list isn’t exhaustive and is highly dependant on your individual situation. This is why we always recommend speaking with a debt professional before making any decisions about your debt.
This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.
We are proud members of the Canadian Debtors Association. We work for you, not your creditors.
If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.