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DOOR NUMBER FOUR: DEBT NEGOTIATION |
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Few people realize that there is another
solution to burdensome debt, an approach that puts
YOU in the driver’s seat, that levels the playing
field between you and your creditors, without
having to file bankruptcy. That solution is debt
negotiation—good old-fashioned American haggling.
Haven’t you ever haggled over the price of a
purchase? Well, exactly the same thing can be done
for your debts!
Just imagine. If you could wave a magic wand
and turn that $25,000 of credit card debt into
$12,500 or even as little as $9,000, wouldn’t that
make a HUGE difference to your financial future?
You bet it would! Most people are skeptical that
this approach is possible. But if you have an
attorney on your team, the odds are very good that
they can cut your debt in HALF or less.
How is this possible? It’s very simple,
actually. Put yourself in the shoes of a manager
of a collection department for a major credit card
bank. You know that bankruptcies are at an all-time high, that consumers file bankruptcy at the
drop of a hat these days, and that the chances of
collecting any money get worse as the debt ages.
You have the opportunity to close your books on a
delinquent account by collecting 50 pennies for
every dollar owed by the debtor, or take a chance
on never collecting a single penny by trying to
hold out for the full account value. You also
realize that once the debt leaves your bank
(usually after six months or so), it will go to a
third-party collection agency. The agency will
take 15%-25% (or more) commission right off the
top of whatever they collect, and they are
unlikely to collect more than 70% of the debt even
with the most aggressive tactics. So you’ll
probably never retrieve much more than half the
money anyway. When you look at it this way,
collecting 50% now doesn’t seem like such a bad
prospect.
Now, the way we’ve described it above, it
sounds like a piece of cake. You might be
thinking, “Okay, I’ll get on the phone and do this
myself.” What will happen? You’ll reach the
“customer assistance team” that we described
above, and the representative will inform you that
other banks may settle for 50%, but their bank
never settles for less than 85%, under any
circumstances. But, of course, they do have that
wonderful hardship program for you.
After you’ve called five or six banks and
received the same treatment, you’ll probably end
up with the idea that debt negotiation doesn’t
work. The problem is that the banks will rarely
take a debtor seriously. Unfortunately, they
simply don’t believe you and they think your
hardship story is phony. The banks are quite
prepared for the amateur do-it-yourself
negotiator. They have the telephone scripts all
set up so that by the time the conversation is
over, the caller feels guilty about the money
owed, and their lame hardship plan sounds like a
great deal after all.
We’re professionals, but if one of us ever got
into a financial pickle, we’d never try to
negotiate our own debts. Instead, we’d hire one of
our colleagues to do the job for us. We can’t
emphasize this enough. Just having a third-party
professional on your team makes all the difference
in the world. There is something almost magical
about this simple approach. Once the banks realize
that they are talking to a professional, someone
who knows the rules and regulations, then they
quickly change their tune. A negotiator will
obtain better results than you could ever obtain
on your own, simply because all of the bank’s
tactics are stymied by the fact that they can’t
talk directly to you. They can’t apply
psychological pressure to you, since this is
filtered out by your attorney.
Besides, there’s no shame in seeking help.
Look at it this way: the banks pull out all the
big guns when you fall behind. They have an army
of collectors ready to pressure you with carefully
scripted techniques. They have collection agencies
and attorneys waiting in the wings to go after you
full throttle. Doesn’t it make sense to level the
playing field?
Doesn’t it make sense to concentrate on
improving your finances and let someone else deal
with the aggravation of the incessant phone calls
that start flooding in once you get behind?
Let’s go over the negotiation process in a
little more detail. When you become our client, we
will impose two simple rules for you to follow:
RULE NO. 1: DON'T TALK TO YOUR CREDITORS
RULE NO. 2: DELAY SENDING MORE MONEY TO
YOUR CREDITORS UNTIL THEY SETTLE ON A MUTUALLY
AGREEABLE SUM.
Do you think you can handle those rules?
They’re tough, aren’t they? Let us explain exactly
why these rules are so important.
RULE NO. 1 is important because only one
person can negotiate your debts for you. If you
only allow the attorney to handle some of the
phone calls while you handle other calls yourself,
the odds are high that you will say something that
is not in your best interests, thereby undermining
your attorney.
You’ve seen the cop shows on TV, where they
always read a suspect his or her rights while
they’re being arrested. “You have the right to
remain silent,” and so forth. Well, in debt
collection, there is a similar rule. A debt
collector is supposed to tell you the following:
“This is an attempt to collect a debt. Any
information you give us will be used for that
purpose.
Your attorney knows exactly what information
to disclose, when to disclose it, and when to
withhold information. The average person, on the
other hand, has no idea what to say in that
particular situation. We tend to respect
authority. Collectors have a lot of nerve and
present themselves authoritatively. They ask you
where you work, how much you make, how much you
pay in rent every month, and so on. The answers,
quite frankly, are none of their business. But
most people feel compelled to answer, in a
misguided attempt to establish rapport with the
collector.
So, the first rule is KEEP QUIET, and let your
attorney do the talking.
RULE NO. 2 is even more basic. Successful
negotiation of your debts will require a
reasonable compromise with your creditors. It’s
important that you save as much money as possible
each month for your attorney to work with.
IMPORTANT DISCLAIMER! We’re not advising
people to walk away from their financial
obligations. Instead, we advise clients to honor
their obligations by making mutually agreeable
settlement payments to their creditors.
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Learn how our
suggested debt program will work > |
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