The last thing you want to be caught in are bad debt deals if you’re trying to make a freedom debt management plan. You need to be on your guard against a few things. If some company is trying to force you into a fast decision without giving you time to think it over, then you probably want to move on and choose someone else. Debt relief is going to take time to accomplish and there’s no point in rushing a decision at the very beginning. Companies know this and so they should be willing to give you time to think. If they aren’t willing to do this for you then you just simply don’t want to deal with them.
Debt settlement is when you call a creditor or Scottish Debt Collection Agency and tell them that you don’t have “X” amount of dollars to pay the whole debt, but if they agree to consider the case closed and that the debt has been satisfied, you can come up with a smaller amount instead. Many debt collection agencies have actually started to offer the opportunity to settle your debts before you even ask because it’s an easier way for them to get their money.
If you owe a creditor money & are struggling to make repayments, they may try to use a debt collector. For years there has been much confusion over what they are actually entitled to do. Can they forcibly enter your home? Can they break a window to get in? Once they are in your home what can they do?
If you’re working on improving your credit score, consider not closing some credit accounts. The common wisdom is that you should reduce your number of credit accounts, but your credit score is affected by the age of your credit accounts and by the percent of your credit that you’re using. If you close an old account, your score could drop, and if you close an account with a high credit line, your score could also drop. If you do choose to close credit accounts, close them wisely.
So what’s the problem? If the collection agency has no legal right to collect, then it looks like you have the upper hand. However, in some states, if the collector can get you to admit the debt is yours or if you pay any amount of money on the debt, the debt becomes new. Not only does the statute of limitations start again, but the collection agency can report the debt to the credit reporting agencies and suddenly your FICO score takes a dive and you start receiving letters from your credit cards advising of higher interest rates and lower lines of credit.
If you personally ask how much they are prepared to settle for, they might knock 10% or even as much as 20% from the debt. You will likely jump at that, while a professional would consider that an opening offer that is not expected to be accepted by you. This is nowhere near the 80% that a professional can negotiate, though not all settlements are as much as that.
Remember that knowing your rights can help you avoid annoying debt collectors. Even though you may owe them money they do not have the right to do whatever they want. They can contact you and only you to try to collect on the debt you owe them. They cannot however tell you that you will spend time in jail if you do not pay them.