Debt settlement professional or self-negotiation

Prior to developing a formal debt settlement strategy, it is important to determine if you prefer to work with a debt settlement professional or negotiate with creditors directly. Each method has its advantages and disadvantages. One benefit to using a professional is that a debt settlement company is experienced in the laws and regulations that affect debt settlement practices. On the other hand, you may find one disadvantage to contracting is working with someone not personally vested in the negotiating process.  Regardless of which debt settlement approach you choose, it is important you target only those debts classified as unsecured. Some examples of unsecured debts are credit card balances and medical expenses. Examples of debt ineligible for debt settlement are student loans, mortgages, and auto financing.

Benefits of debt settlement vs. debt negotiation

If you determine a debt settlement professional is more appropriate for your household, there are several companies you can contract with who specialize in negotiating debt settlement terms. For instance, some debt settlement companies work with consumers prepared to offer a lump sum to their creditors to settle their account. In these cases, if the consumer does not have a lump sum immediately available, the settlement firm will work with the individual to save the exact amount needed. For their services, the debt settlement company is paid a percentage of the savings.

Other debt negotiation companies work exclusively with clients who do not have a lump sum available. Instead, debt negotiation firms administer trusts on behalf of these consumers with the sole purpose of accumulating a savings that will be used to settle their client’s debt at a future date, which is typically take 3 to 5 years. These firms collect a monthly payment that includes their service fee. It is important to note that these debt negotiation programs have a high dropout rate. During this time, late fees continue to accumulate. Typically, consumers are unable to make monthly payments on time and they eventually fall into default. It is important when considering debt negotiation professionals to carefully research prospective vendors to confirm their business practices.

Objections to negotiating settlements

Whether using a professional debt settlement representative or negotiating terms yourself, individuals should be aware of the obstacles they may face when negotiating a settlement. One concern is that until a settlement amount is negotiated and fully satisfied, the creditor can still sue consumers for any amounts owed. Additionally, it is important to note debt settlements may have a negative effect on an individual’s credit score until their account balance is fully satisfied. However, to address this, some debt settlement companies may offer credit repair services as a part of their overall service package. Another concern to be aware of is the adverse tax affects debt negotiations can have when calculating taxable income during tax season. In most instances, the Internal Revenue Service will require taxpayers to report any forgiven debt over $600 as taxable income

First, we believe we can all agree a positive customer experience starts with effective and honest communication.  After all, a customer service representative (CSR) cannot truly achieve customer satisfaction without first gaining a real understanding of its customer’s specific requirements. Of course, before this is possible, a CSR must first establish a rapport that will immediatelly serve as the foundation for honest and transparent dialogue regarding the issues surrounding the customer’s specific needs.  By taking the time to establish a rapport, the CSR will greatly reduce the number of errors experienced or misunderstandings caused by industry professionals that attempt to address client concerns without fully exploring the issues surrounding customer inquiries. 

Over the next few months, we will continue to explore customer service tenets as well as highlight DRSWMI’s approach to customer service when partnering with its many business partners.  We invite you to join in on this discussion and share your own experiences with CSRs that have both humbled you with their commitment to excellence as well as those experiences that left you dissatisfied and wanting more.  We look forward to learning from you.