Negotiating Credit Card Debt Settlements

Debt Consolidation Companies

Businesses that advertise services including "Debt Consolidation" and/or "Debt Settlement" have varying business models. Some companies debt consolidation are simply lenders or their affiliates, who offer to refinance multiple outstanding debts into one loan, with a single monthly payment. The fees for this service are generally included as part of the loan transaction. Companies that solely offer debt consolidation loans include names like Lending Club, Lending Tree, Avant, Upstart, Accredited, and Americor, among many others. These companies offer financial and lending services, not legal or settlement services. Write your text here...

Debt Settlement Companies

In general, businesses offering "debt settlement" services charge fees that are earned by negotiating the settlement of delinquent loans and credit card accounts. These companies are regulated under state and federal laws that establish specific disclosures, limitations, and requirements regarding fees and contract terms, due to the prevalence of fraud and predatory conduct committed in the name of "debt relief." To obtain exemptions from these regulatory measures, many of these companies are operated through an affiliation with a lawyer or law firm, or as a law firm that provides "law-related services" short of actual legal representation. Regardless of whether these companies are affiliated with or operated as a law firm, they do not ordinarily file appearances in collection lawsuits as the client's attorney of record. In the event that a lawsuit is filed to collect one or more debts that are the subject of settlement negotiations, services are usually limited to legal assistance, such as forms preparation, and in some instances, hiring local "appearance attorneys" to show up on court calendars.

Creating Bargaining Power

Negotiating the settlement of consumer debts is one of the many services provided to clients of Carlisle Law Firm. As an attorney licensed to practice law in the State of Georgia since 1996, William R. Carlisle has defended clients against debt collection lawsuits, filed consumer protection claims under the Fair Debt Collection Practices Act (FDCPA), Fair Business Practices Act (FBPA), Fair Credit Reporting Act (FCRA), and the Telephone Consumer Protection Act (TCPA), and negotiated thousands of consumer debt settlements involving credit cards, repossessed automobiles, personal loans, mortgages, and other types of financial instruments. This experience results in the negotiation of more favorable settlements for our clients.

Negotiating From a Position of Strength

With a debt consolidation loan, there is no negotiation. The balances on all outstanding debts are being added together and paid off with a single loan, that is then repaid with interest. With a debt consolidation company, there is at least an effort to negotiate a reduced settlement. However, the negotiations are often conducted by non-attorney employees or agents generally have little to no understanding of collection law, civil procedure, or the collection industry; and none of the tools, strategies, or options available to an attorney specializing in the defense of debt collection. Having limited authority and experience, debt settlement employees usually have very little bargaining power. In order to negotiate from a position of strength, you first have to know the strengths and weaknesses of each party to the negotiation. Once known, you can then work to create bargaining power by maximizing your strengths and minimizing your weaknesses.

Settlements Result From Bargaining Power

Imagine that you hire a debt settlement company. An employee of the company contacts the creditor to discuss settlement. No response. He tries again. No response. You then receive a letter from a collection law firm demanding payment, or a lawsuit will be filed. The negotiator contacts the collection attorney, who requests a "letter of representation" before he will discuss the case. The negotiator is not an attorney, but sends a settlement offer anyway. The collection lawyer then files the lawsuit and you are eventually served, with 30 days to respond. The debt settlement company provides you with boilerplate forms to sign and file with the court, in an effort to prevent the entry of a default judgment. After you file your Answer to the lawsuit, you receive multiple discovery requests, followed by a motion for summary judgment. Having no leverage or bargaining power, you are forced to pay the debt in its entirety, incur a judgment and suffer the filing of garnishment actions and liens on your property, or hire a lawyer. This is a story that has been told many times, with variations, by clients who chose to hire a debt settlement company before hiring a lawyer.

How to Create Bargaining Power & Settle Consumer Debts

By wanting something, you give it value. The more you want it, the more valuable it becomes, and the more it will cost you to get it. If we have been contacted for help, it means you are receiving demands for payment of one or more debts that are delinquent, are being negatively reported on your credit, and may result in a civil lawsuit or money judgment if not addressed. It's not about wanting a settlement, but about not wanting to be plagued by the stress, anxiety, and uncertainty that results from financial hardship and debt collection. You don't mind paying a reasonable and affordable amount if it means you can hand this problem off to someone else, confident that it will eventually be resolved without causing you any more problems. Hiring Carlisle Law Firm takes power away from debt collectors by forcing all communications and demands to come through us, eliminating the worry, fear, uncertainty, and sense of urgency promoted by debt collectors.

Negotiate Like a Debt Collector: Get Rid of Emotion

Settlement Negotiation often depends on perspective. Many people feel a sense of obligation or duty to pay the amount demanded by the debt collector, whatever it may be, and are unable to see the situation from a different viewpoint. For many reasons that are beyond the scope of this post, our perspective is that what you allegedly "owe" is irrelevant to the negotiation. What matters is whether the debt collector or its attorney will be able to collect from you if you refuse to settle, how much they can collect, how long it will take them to collect it, and how much it will cost them to continue pursuing collection. These are the factors that determine the true value of their claim, and the appropriate amount of any settlement. Nothing else should matter.

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