Negotiate Your Own Debt Cancellation If Your Financial Problems Have Gotten Out of Control

Individuals are most vulnerable when facing bills that are past due and they don't know how they're going to pay them. If you find yourself in this unfortunate situation it is important to be careful and not allow yourself to feel intimidated by creditors. No situation is hopeless, and there are always steps you can take to rectify a challenging financial predicament.

If you have past due accounts you may be able to take steps to simultaneously take care of the debts and begin repairing your credit. First, you must determine who is actually trying to collect your past due debt - whether it be your original creditor, or if it is a company or lawyer hired to collect the debt, such as a collection agency. Depending on who is trying to collect, you have different legal rights and should consider different strategies.

Ask for Debt Relief

If you have the means to offer full or partial payment, you can request that any unpaid debt and negative information on your credit report associated with the account be removed. Creditors rarely withdraw negative information, but you may be able to convince collection agencies to do so. Be sure to get written confirmation that the account will be considered paid in full when you pay the agreed amount and request a standard Universal Data Form be submitted, effectively deleting the account from your credit report.

Re-Age Your Account

Re-aging means the account will appear on your credit report for seven years after the repayment date, rather than seven years after the earlier delinquency date. While there are pros and cons, the end result is your account appears as current on your credit report. It in effect makes the current month the first repayment month and stops showing late payments. However, sometimes creditors won't agree to this until you have made two or three consecutive timely payments.

Most creditors are not willing to remove negative marks or re-age accounts, but it never hurts to ask. Contact the creditor or collections agency and explain your situation. Don't be intimidated when negotiating. You have leverage because you are indicating a willingness to settle your account and the creditor wants your money - every little bit counts.

Don't Split the Difference

Many creditors will settle for less than the total debt if you offer to pay a lump sum, but usually insist on full payment if you pay over time. If you offer a lower amount to settle a debt and the creditor counter-offers, don't agree to it right away. Instead propose another offer, less than their counter. Ask for a supervisor if your request is turned down. Whatever you do, don't agree to pay any more than what you can actually afford.

When you reach an agreement, get it in writing before you send in the payment. Adopt a debt settlement agreement or payment plan you can live with and stick to it. If your agreement constitutes payment in full, insist on a signed release that excuses you from the remaining balance. The creditor is likely to ask for something in exchange, but make sure you don't sign anything you don't understand or agree to. Consult an attorney or credit counselor is you are unable to reach an amicable agreement or have concerns. If you deal confidently and assertively with your creditors, they will likely work with you to find a mutually acceptable debt settlement or repayment plan that you can live with.

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