Negotiating Settlements and Timing

Many consumers seeking out debt relief services in the form of debt settlement may be hearing the same thing from a vast array of companies. How successful that company’s methods and tactics are when approaching negotiations, and how every one of their employees is a “true expert” in the art of negotiating with creditors. Beware- often times these methods, or tactics, are far from successful, not to mention often times unethical in their approach. Furthermore, the trouble with enormous debt settlement companies is the fact that they often hire unqualified negotiators to handle their cases. Why would they do this? The fact of the matter is that the debt settlement industry is extremely young (compared to secure consolidation and credit counseling), and there simply aren’t that many experts out there who know the internal policies of each creditor they are dealing with. In simple terms, for experts in the debt settlement industry, reaching optimum settlements is all about timing. This involves a number of sharp perceptions on behalf of the negotiator. Consider the following two situations during the negotiations process:

1) If negotiation occurs with a “difficult” creditor.

By difficult, I mean that a negotiator is aware of the company’s history with the particular creditor. For instance, knowing that fellow negotiators have had a low success rate with a particular creditor should tell that negotiator not to be aggressively forward during the negotiation process. In this instance, if the difficult creditor has suggested that they may be willing to settle for 60% of the overall debt amount, then the timing may be perfect. Arrogance in this situation (shooting for an even lower settlement) is foolish considering the creditor being dealt with. Getting anywhere below the target is essential in these situations- there is no need to push the envelope and risk future relationships with the creditor.

2) If negotiation occurs with an “understanding” creditor.

By understanding, I mean that some creditors are more willing to negotiate and, historically, are more likely to open up to lower offers submitted by the negotiator. In these situations, rushing into a settlement would be a sign of inexperience, and a lack of knowledge the creditor handling the account. Ultimately, when dealing with a creditor who, in the eyes of the settlement company usually settles for less, patience is a virtue during the negotiations process. Timing, in these instances, is all about getting a feel for the person you are negotiating with. Often times, one may negotiate with different people over the course of several months. Inexperienced negotiators do not take advantage of this fact and often become frustrated that they aren’t able to talk to the same person each time. A true expert would submit lower offers to each person and settle for the lowest one agreed upon. For instance, a skilled negotiator will submit ten offers to ten different agents working with for the creditor before making the wise decision of settling for the lowest agreed upon offer.

In addition to the two typical situations faced by negotiators working for debt settlement companies, there is always the factor of a possible lawsuit being filed with their clients. This is due to the fact that the debt is considered past due, because clients voluntarily close their accounts in order to accumulate funds for the settlement if they haven’t already fallen behind. That being said, it is essential to recognize the prime situation for a settlement. Rushing into a settlement may cost a client a significant amount of money that could have otherwise been saved. On the other hand, waiting too long in hopes of an unrealistically low settlement may trigger a lawsuit against the client. Be sure that, when choosing a debt settlement company, they offer a firm estimate right from the get go for the amount they will most likely be able to save you. If you feel in any way that the company is being too optimistic- take a step back and consider a different option- you are probably right.