Debt-Free Forever Gail Vaz-Oxlade (best ereader for epub TXT) 📖

Step 5: Plan your strategy. You can do your debt settlement in one of three ways:

You can decide to offer a lump-sum settlement on the bill. You’d start by offering 25% of the outstanding balance, and negotiate from there. You’re aiming to settle for as close to 50% of the principal as you can.

You can decide to offer a short-term payoff. You promise to repay the full amount outstanding LESS fees and interest within three to six months. (You’ll be astounded at what you can save if the interest and fees are eliminated.) You’ll give postdated cheques if they wish, but only if you get an agreement in writing to waive all interest and fees and not deposit cheques before their due dates. Otherwise, they’ll bury you in fees.

You can decide to offer a long-term payoff. This should take no longer than three years. You’ll no longer use the credit, you’ll get a significantly reduced interest rate, and you’ll always be on time with your payment.

The best of these three options is the first. But that means you’ll have to come up with the money to make the settlement.

Step 6: Find the money to settle. This is where the rubber meets the road.

• Will you get an extra job and bank the money strictly for your debt settlement?

• Will you reconcile yourself to a crappy credit history because you’ve already been sent to collections and stop making payments on your bills so you can bank that money?

• Will you sell everything that isn’t a complete necessity to come up with the money?

•Step 7: Get ready for the collection calls and threatening letters. If you decide to use debt settlement to get out of debt, you’ll stop making payments on your debt to force your creditors to pay attention. As soon as you’re three months late, your phone is going to start ringing off the hook. There are rules about when collections agents may call. But they will call. And your lender will send letters threatening to sue your pants off. When you took the loan, you did sign a legally binding contract. You’ve breached that contract and your lender can sue you. But they most likely won’t. Legal action is very expensive, and it’s often not worth the time or money it takes to collect on small to medium-sized debts. If you do get sued, don’t panic. Remember, you’re in this to get a settlement. Being sued is your lender’s way of forcing the settlement. And if they agree to an out-of-court settlement, the suit will go away. You can work it out.

Step 8: Prepare your settlement letter. On page is a sample debt-settlement letter you can use as a guide.

Step 9: Call your creditors. Starting with the guy to whom you owe the most, it’s time to make the call. Here are some things to remember as you do:

• Be polite and sincere in your desire to solve the problem. Getting angry and yelling won’t help your case. Neither will threats. However, letting your creditors know how desperate your situation is will, so tell them that you owe a lot of people a lot of money and you don’t have a snowball’s hope in hell of paying it all off.

• You have to “sell” them the benefits of your plan. Offer to fax them a copy of your budget and your settlement letter.

• Tell them how dire your situation is and that you have made the same offer to your other creditors. The guy on the other end of the line has to believe that it is in his best interest to settle with you or he won’t be motivated to deal. It is up to your creditors to accept your offer. They may come back with a counter-offer, and you’ll have to weigh whether you can come up with the extra money or not. If you cannot, be upfront and say that your resources are very limited. If you can, say that it may take you a little longer and that you want them to turn off the interest clock and stop any fees from building up while you come up with the extra money.

• Do not, under any circumstances, give your creditors your bank account information.

GAIL’S TIPS

If, when you call, the representative does not want to entertain the idea of settling, ask to speak to a supervisor. Not all agents have the authority to negotiate, so you may have to escalate the call until you find someone who does. If you have no luck on Tuesday, call back on Thursday. It is very unlikely you’ll get the same account representative, and you may get to someone who is in a much more genial mood. (What, you think these guys don’t have good and bad days too?) Be persistent.

Step 10: Keep detailed notes. Get the full name of any representatives with whom you speak, along with their phone numbers. Consider recording the calls. Yes, you can do this. As long as one party is aware a call is being recorded (that’s you), it’s perfectly legal in Canada. And keep every single communication they send you even after the debt is paid. Here’s one set of documentation you want to file under “forever.”

Step 11: Get it in writing. Once you negotiate a settlement with a creditor or a collections agency, you must get it in writing. You MUST get a written settlement offer from the creditor or the collections agency in your hot little hands before making a single payment. If you don’t, the original creditor may choose to see your payment as a “partial payment,” or another collections agency may attempt to collect the balance from you.

GAIL’S TIPS

A creditor has the right to report your settlement to the credit bureau as “settled for less than owed.” That means future potential lenders will see that you didn’t pay in full and figure you for a deadbeat. As part