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A Comprehensive Guide to Settling with Debt Buyers

· Debt Settlement,Don Of Debt,Consumers 101,Debt Free,Debt Collection 101

If you are offending your debts, there are high chances of your creditor selling your debt to a debt buyer. Comprehending what debt purchasers are and learning about their operations can go a long way in dealing with them. You can also try to come up with plans to deal with your debt. 

What are the things you need to be aware of when dealing with a debt buyer?

  • If your debt is very old, the debt buyer will have for sure paid very less for the same. The older your debt, the tougher it is for the creditors to sell.
  • The debt buyer most likely will settle for a far lesser amount than you owe.
  • Try to arrange a settlement with your debt buyer relating to your payment. By doing so, you will prevent from further action, and by settling the debt with them, you won’t be harming your credit score. If not you will also have the risk of getting sued by them.

For these and several other reasons, negotiating with the debt buyer is a safe and wise option. However, it all depends on how you negotiate. If you know what they are and how they operate, you can close it successfully. In fact, it can work better than you can actually imagine. 

Understanding a debt buyer

Do not mistake a debt buyer with a collection agency. They are different. While debt buyers buy debts from primary creditors such as banks, lenders of car loans and credit card companies and other debt buyers, a collection agency only collects for the creditor as a service. A debt buyer will own the debt but a collection agency will not. 

How do debt buyers gain?

Debt buyers generally purchase debts in huge numbers from the creditors at discounted prices. In other words, debt buyers buy debts at low prices and then recover them from the defaulters. So even if they cannot recover the full money that you owe, they will still be able to make huge profits. This is the reason why you get offers for negotiation. A few rounds of talks can get it settled that would be a win-win for both parties. 

How do you know when a debt buyer buys your debt?

Check your mail! Once a debt buyer has purchased your debt, he will intimate the same through the mail. You can also go through your credit account. If you come across a debt with a note “charged off” against your original creditor, or if you see another firm with the debt on a recent date, then that firm is probably a debt purchaser. 

What can you do before your debt purchaser files a lawsuit?

Are you getting phone calls or demand letters from a debt buyer? Do you really owe what he is demanding? Then you need to give it a serious thought! If the debt buyer has not yet filed a suit against you, you are lucky. You have all the chances of negotiating with your debt buyer and make a settlement. However if the time has expired (within which the debt buyer could file a suit), you can ignore his calls. 

When do you need to talk with your debt buyer?

If you have a recent debt and you also have assets and income that can be used to recover the debt, it is time for you to talk to him. Get in touch with him before he sues you. You can seek an attorney’s help to send him a letter requesting more information on the debt. Many a time, debt buyers will change their minds when they realize you have a counsel. However, if he continues to make demands, your attorney can assist you in making a settlement. You can negotiate and try to cut your debt by 40 percent at least. You can try for more, but it is the minimum you should strive for but take note, taxes are applicable on the amount that is let off. 

Make sure you have a good credit report

If you are going for a settlement with your debt buyer, ensure to ask him to have your original creditor take off any negative remark from your credit account. Some debt buyers might not agree, but you have a chance here! Moreover, if getting the original creditor to remove derogatory remarks is not possible for him, he might settle for a lesser amount. Either way, you will benefit. 

Do not enter into a new payment contract

Entering into a new pact with your debt buyer will only complicate things. This should be the last on your mind. Your debt buyer may pressurize you to agree on a new payment arrangement, but doing so will only increase your commitment. Bad debts stay on your credit report for not less than seven years; so the new debt can further harm your credit score. Moreover, you can get sued if you don’t make payments according to the newly agreed terms. 

What can you do when your debt buyer has sued you?

In case a debt purchaser files a suit, you need to respond to him at the earliest by stating the defenses such as bankruptcy or expiry relating to the statute of limitations. When you reply to the lawsuit, he needs to come back to prove that you owe him the money. However, usually, debt buyers do not fight back when consumers respond. This is because they usually lack the required documentation to prove. In case he has the documentation, he might agree for a settlement to avoid spending on trial.

If you do not respond to the suit, the debt buyer will be at an advantage. He will be the winner in the court and might then garnish your pay or levy your bank account to recover the debt.

In conclusion: If you’re finding yourself dealing with a debt buyer, it can be tough to know what the next steps are. The good news is that there are ways to deal with them! We want to help make your life easier by providing some helpful resources for better understanding how debt buyers operate and giving tips on how you can come up with plans in dealing with them. Click here for more information on these topics or contact us if we can provide any assistance at all.