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5 debt settlement do's and don'ts

Don't wait; be proactive
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Don't wait; be proactive

Don't wait until your account has been charged off, which generally happens when your payment is more than six months behind. A charged-off account is a term that the lender uses to reflect that his prospects of getting repaid are slim. It doesn't mean that you no longer owe the debt.

"If you are going to contact your creditors, do it quickly," Jackey says. "Don't wait and think the creditor is going to go away."

As long as your debt hasn't already been written off, some creditors may be willing to talk about debt settlement as your account becomes more delinquent because they see it as a loss risk. But Jackey points out that if you act early, you may have other options, such as formulating a debt management plan that lets you pay the debt in full and salvages your credit score.

"In this economy, creditors are often trying to do loss aversion, where consumers and creditors work together to have a positive outcome," she says.


 

 

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