Consumers have three options as to who will negotiate a settlement on their behalf.
In some circumstances your creditor might be prepared to negotiate a one-time lump sum payment for significantly less than your current outstanding balance as settlement in full. This debt relief option is only available for debts arising from a consumer transaction. Your creditor will not entertain a discounted settlement until your account has not been paid for at least six months. The focus of this article is who is going to negotiate a settlement on your behalf.
If you are interested in settling one or your debts then the $64,000 question is who is going to negotiate a settlement on your behalf?
You have three different options in terms of who will negotiate a settlement on your behalf:
Do-It-Yourself
Hire a Debt Coach to Assist You
Hire a Debt Settlement Firm to Negotiate on Your Behalf
For the remainder of this article I am going to canvass the advantages and disadvantages of each of these alternatives.
1. Do-It-Yourself
You can negotiate a discounted settlement with your creditor or its authorized collection agent.
i. Advantage
The number one advantage of the Do-It-Yourself alternative is cost. It does not cost you a penny for you to attempt to negotiate a settlement. This advantage is especially important where the amount you owe is a relatively small amount.
iii. Disadvantages
There are a number of disadvantages of negotiating a settlement on your own.
The first disadvantage is the risk of a poor result. This is particularly the case the more you owe to your creditors. You should anticipate obtaining better results if you were to hire a debt coach or a debt settlement firm because they have more experience negotiating favourable results.
Over the past ten years I have assisted consumers obtain some very favourable settlements. Earlier this year I was contacted by a consumer who owed almost $19,000 to a creditor that had obtained a judgment against him and put a lien on his home. With my assistance this client was able to settle this outstanding account for a lump sum payment of $6,000, or about 30 percent of the amount owing.
A second disadvantage of negotiating a settlement on your own is that you might make a written acknowledgement of your debt in circumstances that will will prejudice your ability to take advantage of the expiry of a limitation period.
A third disadvantage of negotiating a settlement on your own is that you might be a victim of a financial institution's exercise of its right of set-off. This arises where you stop making payments on your financial institution's credit card, line of credit, or personal loan, and you have a bank account and that same financial institution.
2. Hire a Debt Coach to Assist You
You also have the option of hiring a debt coach to provide you with advice when you negotiate your settlement.
I provide debt coaching services to Canadians. I have a wealth of experience helping Canadians obtain favourable settlements. You would be hard-pressed to find a debt coach in Canada who can assist you obtain a better result.
i. Advantages
There are several advantages to hiring a debt coach to assist you negotiating a settlement.
Firstly, it should be relatively inexpensive to hire a hire an experienced debt coach.
Secondly, you should be able to obtain a better result if you were to hire a debt coach compared with Do-It-Yourself. This factor is particularly important the larger the dollar amount you owe to your creditors.
Finally, hiring a debt coach should ensure that you do not make any rookie mistakes. This includes being a victim of your financial institution's exercise of its right of set off. Furthermore, a debt coach should ensure that you do not do anything to prejudice your ability to take advantage of the expiry of a limitation period.
ii. Disadvantage
The one disadvantage of hiring a debt coach is its cost. If you were attempt to settle a debt on your own you would not pay a penny to do so.
3. Hire a Debt Settlement Firm
One of your options for negotiating a settlement is to hire a debt settlement firm to negotiate a settlement on your behalf. There are two types of providers of debt settlement services. There are debt settlement law firms and there are firms licensed as debt settlement firms under provincial law.
i. Advantage
Debt settlement firms offer one-stop shopping. A debt settlement firm will negotiate directly with your creditor on your behalf.
Debt settlement firms provide all the advantages offered by a debt coach.
ii. Disadvantages
There are a number of disadvantages to hiring a debt settlement firm.
The major disadvantage of hiring a debt settlement firm is its cost. It can be expensive to hire a debt settlement firm.
Some creditors refuse to negotiate settlements with debt settlement firms because they take the position that if a consumer can afford to hire a debt settlement firm then they can afford to pay their outstanding account.
There are creditors who will actually sue a consumer simply because they have hired a debt settlement firm. One might suspect that these creditors want to put debt settlement firms out of business.
Learn more about debt coaching services offered by Mark Silverthorn
If you would like to learn more about the debt coaching services offered by former collection agency lawyer and author Mark Silverthorn you are invited to call me at (519) 987-3270 or make a submission using the form at the bottom of the Home page on this website.
Former collection agency lawyer and former consumer lawyer Mark Silverthorn has a proven track record of assisting Canadians negotiating favourable settlements.
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