Cash Smart USA

Debt settlement letters are made on behalf of a person who is trying to negotiate payment for past due accounts in an effort to get out of debt and repair financial history. Organizations that perform debt settlement can be found online or a consumer may choose to try to handle negotiations with creditors alone. Most creditors are going to want a certain percentage of the past due balance before they will negotiate with the consumer. Debt settlement companies often develop relationships with creditors and can usually negotiate better than a consumer can alone. During negotiations, interest and late charges should stop as well as harassing phone calls and letters by the creditor. A debt settlement company can help to make sure that this happens.

A consumer may receive a debt collection letter from a creditor or a third party collection agency that offers a lump sum settlement that is less than the actual balance owed on a past due account. If the offered amount is satisfactory then there is no reason why a consumer should not go ahead and accept the offer but should try to deal with the actual creditor when doing so. The most important thing is to make sure that the creditor is going to report the settlement to the credit bureau as a paid off account or paid as agreed so that it will affect the credit score in a positive way. The best way to handle this type of situation is to let a debt settlement company draft a debt settlement letter with the agreement that serves as a counter offer to a creditor including all of the specifics about reporting to the credit bureau.

Correspondence with a creditor or collection agency should be documented. The consumer should keep a file on the account by recording the date, time, and person of contact, and what the conversation was about. Any mailings about the account should be sent certified mail, return receipt requested for proof of mailing. Debt settlement letters should be drafted in a professional manner to document any agreements about the account that are made over the telephone. When dealing with a collection agency the consumer should make sure they are a legitimate agency that is representing the creditor before having any correspondence with them.

If there is any question as to the legitimacy of a debt the consumer should not agree to settle until he or she confirms that the money is owed. Even making one payment can legally make the consumer responsible for the debt because that is the same as saying that it is legitimate. A debt settlement company can guide the consumer in communicating with creditors and collection agencies. Sending out a debt settlement letters should not be done until the consumer has verified and confirmed that it is a legitimate debt. Even after confirmation has been made the consumer should not be fast to settle until the creditor agrees to the negotiated terms on paper. Any legitimate creditor will be glad to comply.

If a person is contacted by a collection agency there are some things that should be done. Always get the name of the person who is calling, the phone number, and the address. Write down the name of the company they are representing, the account number in question, and the full amount of what it owed or being collected. Ask the collection agency for a follow-up letter of the phone call. If a collection agency attempts to collect a debt by using harassment then the person being harassed should write a letter to them asking them to discontinue contact. If this happens a person can hire a debt settlement company to help in handling this type of situation.

After everything is finalized and the lump sum settlement has been paid according to a debt settlement letter, the consumer should check his or her credit report to make sure that the creditor has listed the account as paid in full or paid as agreed. The creditor may need a couple of weeks or so to get this taken care of but if the consumer has waited as long as 30 days for this to appear on the credit report and it still has not been done then follow-up with the creditor is needed. The agreement letter should be copied and sent to the creditor as a reminder of the agreement. In addition, it never hurts to go ahead and make a phone call to the creditor as well and then follow-up with the written reminder.