Negotiate Debt Settlement On Your Own // Insider Tips From A Lawyer
Summary
TLDRIn this video, Hannah from SoloSuit discusses strategies for settling debt with consumer rights attorney John Skiba. They advise against threatening bankruptcy, as it's ineffective and expected. Instead, they suggest painting a realistic picture of one's financial situation to persuade creditors to accept a settlement. The conversation covers the roles of creditors, debt collectors, and law firms in debt settlement, emphasizing the importance of understanding the negotiation process and the various parties involved.
Takeaways
- 🤔 The best approach to negotiate debt settlement is not by threatening bankruptcy, as creditors often expect it and it's ineffective.
- 💼 When negotiating, it's crucial to help the creditor see the value in your offer by painting a realistic picture of your financial situation.
- 📊 If you have a judgment against you, emphasize the limited options creditors have in collecting from you, like being on Social Security or having wage garnishment.
- 💬 Be transparent about your financial hardships and other creditors to show that bankruptcy might be a realistic option if they don't settle.
- 🏦 If you have tax debts or liens, mention them as they take priority over private debts and can affect the creditor's ability to garnish your wages.
- 💡 Understand that negotiation is a back-and-forth process; be prepared for counteroffers and adjust your strategy accordingly.
- 📉 Don't make an offer that's too low; it should be reasonable relative to the debt amount to be taken seriously.
- 👥 Be aware of the different players involved in debt settlement, including creditors, debt collectors, and debt law firms, each with their roles and decision-making processes.
- 📚 If the debt goes to litigation, you'll typically negotiate with the debt law firm, which will then seek approval from the creditor or debt collector.
- 🚨 Before a debt is sold or charged off, you might deal with in-house collection people or collection agencies hired by the original creditor.
- 🌐 For more help on debt settlement and resources, consider visiting SoloSuit's website, which offers tools and guidance to help you navigate the process.
Q & A
What is the common question people ask about debt settlement at SoloSuit?
-The common question people ask is 'how much should I offer to settle my debt?'
What is the role of a consumer rights attorney in debt settlement?
-A consumer rights attorney helps to negotiate with creditors and debt collectors to settle debts for less and provides guidance on how to approach the negotiation process.
Why is threatening bankruptcy not an effective strategy in debt settlement negotiations?
-Threatening bankruptcy is not effective because it is often anticipated by creditors and debt collectors, and they usually have it factored into their calculations.
What is the importance of painting a picture of the debtor's situation during negotiations?
-Painting a picture of the debtor's situation helps the creditor understand the reasons to accept the proposed settlement offer, especially if the debtor is currently judgment proof or facing other financial hardships.
How does having a wage garnishment or other lawsuits affect the negotiation process?
-Having a wage garnishment or other lawsuits can be used to show the creditor that the debtor is facing multiple financial obligations, which might make bankruptcy a realistic option and thus encourage the creditor to settle for less.
What is the significance of mentioning tax debts or liens during debt settlement discussions?
-Mentioning tax debts or liens is significant because they take priority over other debts, which can limit the creditor's ability to garnish the debtor's wages, thus potentially leading to a more favorable settlement.
Why is it important to understand that there will be a counteroffer in debt settlement negotiations?
-Understanding that there will be a counteroffer is important because it sets the expectation that the negotiation process involves give and take, and it prepares the debtor for the back-and-forth nature of the discussions.
What is the typical process for debt settlement involving multiple parties like creditors, debt collectors, and law firms?
-The typical process involves negotiating with the law firm representing the creditor or debt collector. The law firm then goes back to their client for approval, which can involve multiple rounds of back-and-forth communication.
Why might a debtor not be successful in negotiating directly with the original creditor during the early stages of debt collection?
-In the early stages, the original creditor might refer the debtor back to the attorney handling the case, as they are not yet in a position to negotiate settlements directly.
How does SoloSuit assist individuals in dealing with debt collection lawsuits and settling debts?
-SoloSuit provides resources and products to help individuals respond to debt collection lawsuits and settle their debts outside of court, empowering them to represent themselves in resolving their debts.
What additional resources does SoloSuit offer to help individuals with debt-related issues?
-SoloSuit offers a blog with resources and answers to common questions, as well as products designed to assist with debt collection lawsuits and out-of-court debt settlements.
Outlines
💼 Navigating Debt Settlement Negotiations
Hannah from SoloSuit introduces a discussion on debt settlement, focusing on how to approach creditors and debt collectors for negotiating lower settlements. She interviews consumer rights attorney John Skiba for insights. John advises against threatening bankruptcy as it's ineffective and expected by creditors. Instead, he suggests painting a realistic picture of the debtor's situation to persuade creditors to accept a settlement. He emphasizes the importance of showing hardship, explaining why the debtor is 'judgment proof', and disclosing other financial obligations that may take priority over the debt in question. John also mentions that any offer is likely to be countered, so it's crucial to propose a reasonable amount that reflects the debtor's circumstances convincingly.
🏛️ Understanding the Debt Settlement Process
The conversation continues with Hannah and John clarifying the roles of different entities in the debt settlement process. They discuss the typical progression from in-house collection efforts by the original creditor to involvement by third-party debt collectors and eventually legal action by debt law firms. John explains that once legal action is initiated, negotiations usually occur with the law firm representing the creditor or debt buyer, who then need to seek approval from their client for any settlement. Hannah highlights the complexity of the process and the importance of understanding the various players involved. She encourages viewers to visit SoloSuit's website for more resources and assistance in dealing with debt collection lawsuits and settling debts outside of court, emphasizing SoloSuit's support and commitment to helping individuals resolve their financial challenges.
Mindmap
Keywords
💡Debt Settlement
💡Creditor
💡Debt Collector
💡Bankruptcy
💡Hardship
💡Wage Garnishment
💡Tax Debt
💡Child Support
💡Attorney
💡Counter Offer
💡Judgment Proof
Highlights
SoloSuit's Hannah discusses how to settle debt and negotiate with creditors.
John Skiba, a consumer rights attorney, shares insights on effective debt settlement strategies.
Threatening bankruptcy is often ineffective as it's a common tactic and expected by creditors.
Negotiating a debt settlement involves helping the creditor see the value in your offer.
Showing financial hardship can be persuasive in debt settlement negotiations.
Being 'judgment proof' or having other creditors can influence the negotiation process.
Tax debts and liens can take priority over other debts, affecting settlement negotiations.
Having back child support or alimony can make debt collection more challenging for creditors.
Settlement offers should be realistic and not too low to avoid outright rejection.
Understanding the negotiation process involves multiple parties like creditors, debt collectors, and law firms.
Debt law firms often represent the creditor and need to get approval for settlements.
The negotiation process can be time-consuming due to the need for approvals.
SoloSuit offers resources and products to help individuals respond to debt collection lawsuits.
SoloSuit aims to empower individuals to represent themselves in resolving debts.
The video concludes with encouragement for viewers to seek help if needed and to utilize SoloSuit's resources.
Transcripts
Hey everybody, it's me Hannah with SoloSuit, and a common question that we get at SoloSuit
is "how much should I offer to settle my debt?" If you've been sued for debt,
you've probably asked yourself this question, and you may also wonder,
"how do I negotiate with creditors and debt collectors to settle my debt for less?"
I wanted to find the answers to these questions, so I asked a consumer rights attorney, John Skiba,
these questions and more. I hope that this video helps you find some answers on how
to settle your debt for less, save money, and move on with your life.
Thanks so much for watching, and just know that SoloSuit is rooting for you,
and we believe you can settle your debts.
Hannah: What do you think is the best thing to say to junk debt buyers, debt collectors, creditors
to get them to settle? What kind of language would you use to negotiate a debt settlement?
John: One of the first things people jump to that I think is actually
not. I guess I'll start with that. What I don't think is effective is threatening bankruptcy. It's
kind of a cry wolf thing. Everybody threatens bankruptcy. It's built into their numbers.
They understand that a certain percentage of these cases are going to file for bankruptcy,
and often when you tell them, I'm going to file bankruptcy, you're going to get a response of,
okay, go ahead and do it. And so I don't think that that's effective to me when
you're trying to settle with a creditor. And when I help people do debt settlement,
when someone has a judgment or something, what I view is, I view my job is to actually help the
attorney on the other side or the creditor sell whatever I'm trying to propose to whoever has to
be the decision maker. You've got to paint a picture of, look, here's what I'm proposing,
and it doesn't get any better than this. You've got to give them some reasons to be able to accept
your offer. And this is particularly true if they already have the judgment because they have a leg
up on you. But if it's something where it's pre lawsuit or just something, you need to be able to
show them hardship. You need to be able to let them know if you are judgment proof right now,
or if I have someone come in and they're on Social Security, that's one of the first things I tell
the creditor, look, they're on Social Security, so that's code for you're not going to be able
to garnish them. If you already have a wage garnishment. If you have other creditors or other
lawsuits, I always say put it out there, let them know that, look, you're not the only one. There's
a line of people trying to come after me here that also does tell them that there's a bunch of
lawsuits or a bunch of creditors, that bankruptcy might be a realistic thing there, because you're
dealing with a lot of different fronts. If you have tax debt or tax liens, I often will bring
those up because those will trump their ability to try to garnish you. The government makes the
rules. The rules that they come first. If you have back child support, back alimony, those are
the types of things that I bring up. Those are the factual situations that are telling the creditor,
and particularly if they have an attorney, this is going to be a tough one to try to collect on.
We better just get something in place. And also, knowing that no matter what you offer, you could
offer 98% and they're going to come back at 99. They're always going to counter you no matter
what you do. So to be prepared for that, and you also have to kind of walk this fine line of
proposing something that's high enough that it's just not ridiculous if you owe a $10,000 debt,
if you come in at $200, the answer is no. They're not even going to take it to their client. Usually
that's a no. You need to understand that there's going to be some give and take here, but you need,
again, to paint a picture. It's not so much the dollar amount, it's everything else around it that
helps them to understand that, look, they're going to take to their client and say, you're not going
to collect on this one. This is probably a good deal, or let's come back with this and maybe we'll
get something in place. So those are the kinds of things I look for when I'm helping people settle,
is why is it, what are the factual situations in this person's life that are going to lead
this creditor to say, okay, we'll take less? Hannah: So you talked about negotiating with
someone and then them going back to their client. There's a lot of different players
in this sphere of debt settlement and debt lawsuits, and I just want to make sure our
viewers understand the process and how it works. So typically there could be a lot
of levels. A creditor is the original lender or credit issuer. Right. Debt collector could
have taken on the case or the account to try to recover the funds that were lent or borrowed.
And then when it escalates to legal action, often debt law firms will come in and they're
the attorneys that file the case. So there could be a creditor, there could be a debt collector,
and then there could be the debt collection law firm. And usually you're negotiating with the
law firm. Right. And they go back to their client, which would be the debt collector or the creditor,
depending on who is suing. Right. But it's the debt law firm that you're negotiating
with. So you're negotiating with attorneys essentially, right?
John: Yeah. If it's gotten to the point of litigation, then yes. And I do have people
ask me all the time, like, well, I don't want to talk to the lawyers. I'm just going to call
the original creditor. They're just going to refer you back to the attorney in the first
six months. We talked about that time frame when the first payment is missed up to that 180 days,
that six months before charge off, you're likely going to be dealing with in house
collection people at the credit card company. Sometimes they'll farm it out to a collection
agency. They're not selling it to the collection agency. This is just a hired gun out there who's
trying to negotiate it. And they usually have some preset settlement authority they're going to be
able to work with once it gets sold. Sometimes you'll deal with the internal collection people
for the junk debt buyer. But if they have an attorney involved, they are going to have to
take it and go back and get approval for it. It can take some time. There's kind of some back and
forth with this. So those are the kinds of things to be aware of. A lot of people misunderstand,
too. They think that usually the lawyers, that they bought the debt. I don't see that a lot. I
mean, some firms do, but for most of the time, the lawyers, they're just attorneys. They're
just representing the creditor or the junk debt buyer, and they don't have any actual ownership
interest in the debt. They've got to take it back and get approval for that settlement.
Hannah: Okay, cool. Yeah, there's just a lot of players there,
and it gets kind of confusing. So I wanted to make sure our viewers understood that.
Thanks, everybody, for watching. I hope you found some answers to your questions. And
if you feel like you need more help, head over to solosuit.com. We have a blog with resources
that can get you more answers to more questions. On top of that, we have products that can help
you respond to debt collection lawsuits and settle your debt outside of court.
So, if the thought of representing yourself in a debt collection lawsuit intimidates you,
or if negotiating a debt settlement seems scary, go over to solosuit.com.
We can help you respond to a debt collection lawsuit, settle your debt outside of court,
and empower you to represent yourself in resolving your debts for good. Thanks so
much for watching, and good luck resolving your debts. SoloSuit is rooting for you!
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