How would you like to repay half of what you owed the bank and never be bothered by them again? This is a proposition that almost anyone would like to have. But note that structured debt settlements with reduced balances will affect your credit score badly. Even though the money is officially settled and paid, the fact is that you did not fully repay the original sum owed. The reduced balance settlement will be recorded like a bad debt. And depending on how different banks and financial institutions view that, you could have problems for many year to come when applying for any kind of credit facilities.
Remember that lenders are not charities. They are not going to grant you a discount for no reason. But if they think that you are showing real signs that you are going under real soon, they might be willing to take whatever they can get their hands on before you file for bankruptcy.
Step 1 – Make contact
You must first contact the accounts department of the bank. Just call up their hotline and request to speak to someone regarding settlements. You will be transferred to the right department accordingly. Don’t take direction from your banker. Banks are huge organizations and many times, bankers and settlements staff do not know each other at all.
Step 2 – Give an ultimatum
You are not looking to negotiate. You are calling to say that you are willing to settle at a specific amount. Do not beg or play the pathetic card. People who are going under will have no fear as they have nothing more to lose. That’s why they are not afraid to ask for the moon no matter how unreasonable it might sound. You want to embrace this mindset with conviction.
Step 3 – Make an insulting offer
Low ball to your heart’s content. No matter what you offer, the settlements officer will try to ask for more. So you might as well start low – as low as 10% to 20%. Getting something back is definitely better than getting nothing back. The officer has a boss to report to and being able to get something out of you could be something he can boast about to his boss. The truth is that you can never know the circumstances they are under. Do what you must and see what happens.
Step 4 – Ask for extras
Do you know that the records of people in the credit bureau is just an aggregation of the information banks report to them? This means that even if you have defaulted for a whole year, your credit will be clean as long as your lender does not report it to the bureau. Everything is negotiable when it comes to a bank. Since you have gone this far, you might as well ask for more by requesting that your credit is kept clean.
Step 5 – Documentation
Have you ever signed up for something with a bank and later charged for something you are not aware of? And when you ask the bank about it, they tell you to read the terms or fine print. It’s time for payback. Get everything you have got the bank to agreed upon in writing. Save all emails, letters, and conversations to back you up if needed. The problem with the new world is that capitalist always use the “law” to protect themselves from the evil they do. To play this game and win, you need all the documentation and evidence you can get your hands on.
Step 6 – Payment
Once the debt settlement have been properly structured, you will most probably have to make recurring payments based on a schedule which had been agreed upon. Always pay by cash or cashier order. Because if you use a GIRO service, you are just revealing where your money is at.