Negotiate Debt Settlement On Your Own // Insider Tips From A Lawyer

Summary

In 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

00:00

💼 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.

05:05

🏛️ 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.

Keywords

💡Debt Settlement

Debt settlement refers to the process of negotiating with creditors to reduce the total amount of debt owed. In the video, this is a central theme as the host seeks advice on how to effectively negotiate with creditors to settle debts for less. The conversation emphasizes the importance of presenting a compelling case to creditors, showing why the proposed settlement amount is the best they can expect given the debtor's financial situation.

💡Creditor

A creditor is an individual or entity to whom money is owed. In the context of the video, creditors are the original lenders or those who have purchased debt and are looking to recover the funds. The discussion revolves around strategies to negotiate with creditors, highlighting the dynamics between debtors and those to whom they owe money.

💡Debt Collector

A debt collector is a person or agency employed to pursue payments on debts owed to others. The video script mentions that debt collectors may take on the case of recovering funds from debtors. The role of debt collectors is crucial in the debt settlement process, as they are often the initial point of contact before legal action is taken.

💡Bankruptcy

Bankruptcy is a legal process through which individuals or businesses are relieved of the obligation to repay some or all of their debts. In the script, bankruptcy is mentioned as a strategy that is often anticipated by creditors, hence not considered an effective negotiating tool. It illustrates the complexity of debt negotiations and the need for alternative strategies.

💡Hardship

Hardship refers to a difficult or trying circumstance that may affect a person's ability to meet financial obligations. The video discusses the importance of demonstrating hardship to creditors as part of the negotiation process, suggesting that creditors may be more willing to settle for less if they understand the debtor's challenging financial situation.

💡Wage Garnishment

Wage garnishment is the legal procedure through which an employer withholds a portion of an employee's wages to pay off a debt. In the script, it is used as an example of a situation that can be communicated to creditors to show the debtor's limited ability to pay, thereby supporting a case for debt settlement.

💡Tax Debt

Tax debt is money owed to a government for unpaid taxes. The video mentions tax debt as a factor that can influence the debt settlement process, as tax debts often take priority over other types of debt, which can affect the creditor's ability to collect.

💡Child Support

Child support is the financial support paid by a parent for the care and upbringing of a child. In the context of the video, having back child support is used as an example of a higher priority financial obligation that might make it more difficult for a creditor to collect on a debt, thus potentially influencing the settlement negotiation.

💡Attorney

An attorney is a legal professional who represents clients in legal matters. The script explains that when debt collection escalates to legal action, attorneys from debt law firms become involved in the negotiation process. Understanding the role of attorneys in debt settlement is crucial for debtors looking to negotiate effectively.

💡Counter Offer

A counter offer is a response to an initial offer in a negotiation, proposing a different term. The video script mentions that creditors will often counter an initial settlement offer, emphasizing that negotiation is a back-and-forth process where both parties propose and adjust their offers until an agreement is reached.

💡Judgment Proof

Being judgment proof means that a debtor has no assets that can be seized to satisfy a judgment. The video discusses the importance of communicating one's judgment-proof status to creditors as part of the negotiation strategy, suggesting that this can influence the creditor's willingness to accept a lower settlement amount.

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!