Negotiating settlements - creditors playing hardball

izzibear

Hi

I've posted before under "How to settle debt" with an update explaining that I've written to all my creditors offering 30% to settle. A few of them have refused and come back with 80% settlement offers, but I haven't got the money to pay them all off at that rate.

Some of these debts are more than 6 years post-default and some of them can't produce credit agreements, so I would have though I was in a fairly strong position, since I have a lump sum to pay them (just not in full).

I'm wondering what to do next - shall I write again offering 40%? Realistically I could go up to 50% but I'm thinking I should leave some further room for negotiation. If they won't accept that I'll just have to carry on making my nominal monthly payments but surely they would rather have a lump sum now than £5 a month for the rest of my life?

sourcrates

Creditors can be funny beasts where settlements are concerned.

The ones who cant produce credit agreements, you can forget.

If its the best settlement deal your after, then wait till they sell the debts on, (if they haven't already) original creditors never give much discount, companies such as Lowell, who buy delinquent debts for pennies in the pound, can afford to be much more generous.

Arleen

sourcrates wrote: »

Creditors can be funny beasts where settlements are concerned.

The ones who cant produce credit agreements, you can forget.

If its the best settlement deal your after, then wait till they sell the debts on, (if they haven't already) original creditors never give much discount, companies such as Lowell, who buy delinquent debts for pennies in the pound, can afford to be much more generous.

One thing to add - you are now flagged as having money; so the chances that they will now try to enforce payment of the debts substantially rose. So while it may seem that you hold all the cards, it's a slippery slope that can quickly turn.

izzibear

I think they've all been sold on, or at any rate I'm being contacted by debt collectors for all of them.

Lowell is one of the ones who have just offered me 80%!

I'm not sure about just ignoring the ones who haven't sent credit agreements as why would I have been making payments for the last 10+ years if I'm denying the debt? I realise it's not strictly enforceable in court but I don't want it to get that far.

Should I write back and offer 40% as a next step?

Arleen

It's admirable that you want to repay those debts, seriously kudos for that as most people would take that easy way out.

As for next step, it really depends on what is your plan. You can say that 35% is your final offer and then don't budge an inch, they will either accept it, sell the debt forwards or try to enforce it. The enforcing part is your worst case scenario, but then you can always return back to negotiations, as it's pretty darn expensive thing.

izzibear

Thanks Arleen
I'd rather not pay them if I'm honest but neither do I want to find myself in a position where I'm standing up in court denying that I owe the money, when I clearly do. I've worked in the legal profession and have a healthy respect for the ability of many judges to get to the truth of the matter when people are trying to wriggle out of their obligations.

It looks like I'm going to be writing to them all again and offering 40%, but I can't go beyond that and don't want to pay off some but not others. If they don't accept I suppose I'll just have to carry on with the monthly payments and hope they don't decide it's worth starting proceedings now that I've got some cash.

Arleen

The whole trick to negotiations is that you must at the same time:
1. Stick to your guns
2. But also be reasonable

It's an art to balancing the two and is what differentiates bad from good in that field. So as a newbie stick to a simple strategy, and if you say to them that this is your final offer - do not ever move away from it unless circumstances change like if they go for the collection. This process takes time, so if they won't take it now, just keep waiting and put the money on some savers account, earn some interest assuming that you don't have any interest bearing accounts.

izzibear

Thanks, that sounds like good advice.

fatbelly

It is the one occasion when it can be useful to have a phone discussion.

Normally we advise against this as it gives the creditor an opportunity to harass you without a record of the harassment.

But now you are in a strong position - you want to give them a large chunk of money but you also want some movement from them - and both of you know they've not paid anything like the sums you are talking about, for the debt.

If you do get a deal from the conversation, make sure it is confirmed in writing before you release the money.