Negotiating with creditors helps you to get a good debt settlement plan so that you could get rid of all your business debts quickly and eliminate the mental distress caused by the nagging creditor/collection calls. If you have decided to opt for debt settlement for your business debts, you need to bargain smartly with your creditors and focus on avoiding all the common pitfalls. By understanding the frequently made negotiation mistakes, you could effectively boost your chances of fruitful negotiations. Here are some debt settlement negotiations mistakes that you need to avoid.
You Do Not Bother to Find Out What Type Your Business Debt Actually Is
There are basically two types of debts. They are a) the secured debt and b) the unsecured debt. Secured creditors are interested in some kind of an asset. You would need to offer your home or some other asset as security. If you fail to pay off the debt, your creditor would be taking away the home or other properties. Unsecured creditors would be lending
money without asking for any security. Even if the debtor is unable to pay back he has no claim on the debtor’s home or property. Some unscrupulous unsecured creditors may threaten to take your home or other assets saying they are secured, creditors. If right from the beginning you are sure about the loan type, you would never get fooled by this trick. Learn more by browsing through debt settlement reviews.
You Do Not Know Your Creditor’s Strengths
Secured creditors obviously have the power and authority to repossess your valuable property. Unsecured creditors have some other powers and strengths like:
- They could call you and send letters demanding payment.
- They could sue you on the grounds of breach of contract. Some of them would be starting a lawsuit even when negotiations are still pending. However, the debtor must stay calm and strong and be determined to negotiate.
- They could garnish your wages. If your creditor is able to win a legal case against you, he would have the right to garnish your wages.
- They could be levying bank accounts. In the event the creditor has won the legal case against you, he would have the right to take away money directly from your bank accounts.
It is best to be aware of the strong points of your creditors before opting for business debt settlement.
You Use the Wrong Money
Cash is the ultimate in debt negotiation. If you are able to transfer funds immediately, your debt would be settled at the earliest. Debt settlement is all about cash. However, it is essential for the debtor to avoid taking out a home equity loan or using retirement funds for paying the debt. The debtor would require paying a heavy tax for withdrawing funds from the retirement fund. Alternatively, he may have to again take the pain of paying back all the money, if taken as a loan from the retirement fund.
You Did Not Take Down Notes
Most creditors tend to give conflicting information all the time. Debtors must take down detailed notes regarding who they had spoken to, when, and exactly what was the negotiated amount.
If you understand all the basic concepts and are aware of the common mistakes before making the important call for negotiation to a creditor, then debt settlement could prove to be worthwhile and you would enjoy relief from financial burdens.