Get Debt Settlement Agreement

Depending on the creditor and how much you owe, you may be able to settle for anywhere from 30% to 70% of the outstanding balance of your debt. Typically, a creditor will only consider a settlement when an account is delinquent, but you should keep in mind that they're not required to accept your offer.

Verify that it's your debt. Understand your rights. Consider the kind of debt you owe. Offer a lump sum. Mention bankruptcy. Speak calmly and logically. Be mindful of the statute of limitations. Negotiate how the debt will be reported to credit bureaus.

Verify that it's your debt. Understand your rights. Consider the kind of debt you owe. Offer a lump sum. Mention bankruptcy. Speak calmly and logically. Be mindful of the statute of limitations. Negotiate how the debt will be reported to credit bureaus.

Start low by offering to pay 30 percent or less of what you owe and negotiate your way to an amount that you and the collector can both agree upon. Make your offer attractive. If you're going to ask that they settle for 70 percent off of what you owe, you should pay it in a lump sum payment.

It might take some time to get there, but most unsecured creditors will settle for around 30 to 50% of the debt. Therefore, you should start with a lower offer—around 15%—and negotiate from there.

Keep in mind, debt collectors will want to collect as much as they can as quickly as they can, so spreading your payments over more than a few months likely won't be an option. You may, for example, offer to pay a lump sum of $3,000 on a $5,000 debt.

If you decide to offer a lump sum, understand that no general rule applies to all collection agencies. Some want 75%–80% of what you owe. Others will take 50%. Those that have given up on you may settle for one-third or less.

The Business of Debt Collection Sometimes these agencies act as middlemen, collecting customers' delinquent debts – debts that are at least 60 days past due – and remitting them to the original creditor. The creditor pays the collector a substantial percentage, typically 25% to 45%, of the amount collected.

Debt settlement is a practice that allows you to pay a lump sum that's typically less than the amount you owe to resolve, or “settle,” your debt. ... Paying off a debt for less than you owe may sound great at first, but debt settlement can be risky, potentially impacting your credit scores or even costing you more money.

A debt settlement remains on your credit report for seven years. As with all debts, larger balances have a proportionately larger impact on your credit score. If you are settling small accounts—particularly if you are current on other, bigger loans—then the impact of a debt settlement may be negligible.