4 Steps I Used to Negotiate Debt and Save $6,500

If you just can’t make your payments, there
is a way to cut the amount of debt you owe in half and keep it from destroying your credit. By the time you finish this video, you’ll
have the step-by-step process I used to negotiate debt, wiping out $6,500 from a $10,000 debt
owed to credit cards and a signature loan. We’re talking the debt negotiation process
today on Let’s Talk Money. Joseph Hogue here with the Let’s Talk Money
YouTube channel. I want to send a special shout out to everyone
in the community, thank you for taking a part of your day to be here. If you’re not part of the community yet,
just click that little red subscribe button. Today’s video is the ninth in our debt payoff
series, an entire series on ditching your debt from creating those goals that are going
to motivate you to some tricks I’ve learned to pay off debt. Think of it like a TV series, at the end of
this season, you will have all the tools you need to finally get out from under that crushing
debt. Make sure you subscribe so you don’t miss
any of the episodes. I’ll also be putting these videos in a special
list in the Playlists section of the channel and link to it in the video description below
so you can watch the series in order. We have covered an insane amount of information
in the series. I shared a complete debt payoff system, a
unique unbudgeting method that finds extra money in any budget and we’re three videos
into boosting your credit score so you never have to worry about rates again. I would love for everyone to be able to use
this system to pay off their debt as fast as possible and be done with it. But it just isn’t going to be that easy
for everyone. If you’ve just gotten too far over your
head, there may be no way you can make your monthly payments. That’s when you need to consider debt negotiation,
working with your creditors to pay what you can and wipe out the rest. I’m going to share the exact process I used
in 2009 for negotiating $10,000 in credit cards and signature loans down to $3,500 so
I know it works. I’ll show you the two best times to start
negotiating, whether it’s with a lender or a collection agency. I’m also going to give you some ammunition,
a list of things you can ask for in the negotiation and the answers to the most common rejections
you’ll hear. We’re going to get to all of that but I
want to warn you about two things right now, two huge traps for anyone in your situation. That’s bankruptcy and debt settlement companies. First, I know bankruptcy can seem like a great
idea. Just wipe everything clean and start over. It is NOT that easy. Bankruptcy stays on your credit report for
10 years. Any credit during that time is going to be
at astronomical rates and it’s actually going to end up costing you more than the
debt negotiation process we’ll talk about. Second, debt settlement companies are going
to do exactly what I’m going to show you how to do in this video…except they’ll
charge you a minimum of $3,000 to do it and it will take three years or more. I worked part-time as a credit counselor while
getting my degree, those debt negotiation companies are useless and only out to take
what money you have left. Alright, now that you can avoid the two biggest
traps, we can get started with the good stuff. I’m actually excited. This isn’t a great situation to be in but
understanding this process is going to get you to a good place. You’re going to finally be able to get on
your feet, get out ahead and you should be excited about that. Let’s look at the big picture of debt negotiation
then I’ll break down each step. There are four steps here; Understanding your
debt situation, Getting your information together for each loan, planning your negotiation strategy
and finally negotiating. What, you thought it was just about picking
up the phone and asking the credit card company to take less than you owe? If creditors made a habit of just cutting
people’s debt anytime they asked…well, they’d be out of business pretty soon. No, real debt settlement, professional debt
negotiating means mapping out a strategy. Taking a couple of hours to know your strengths
and how to hit the creditors’ weaknesses. Think of it this way. If you spend three hours on this and get even
60% of ten grand in debt wiped out, you just made $2,000 an hour. That’s like Bill Gates money! Makin’ it rain there with Branson. First here is just to understand why you are
in so far over your head. Was it a one-time emergency expense or maybe
a habit of overspending? Even wiping out your debt isn’t going to
help if you just get back into debt. Run through the unbudgeting system that we
talked about in the second video of the series. This is going to make it easy to track where
your money is going then you can use some of the tricks in the third video to see how
much money you really have each month. This is going to be important because it will
tell you how much of your debt you can pay off and how much you’re going to need to
settle. You might want to get the help of a credit
counselor. This is usually a free service of a non-profit
group associated with the state government but steer clear of anyone that wants to settle
your debt for you. You’re going to do that yourself and save
a few thousand. Now you go through your credit report and
bills to get all the information you can about your debts. This is going to include; the name and address
of each creditor, whether it’s been sold to a collection agency or still with the original
lender, amount owed, payment history and any fees being charged. That point about who holds the loan is an
important one. Lenders will usually sell their bad loans
to a collection agency after 3 to 6 months of missed payments. They might get only $0.10 on the dollar so
offering more is going to be important in our negotiating strategy. They might also just hire the collection agency
to harass you for a fee. So it’s important to know who you need to
talk to when you start negotiating. Now you’re ready to plan your negotiation
strategy. You’re a debt general standing above this
map of all your debts and planning where to attack, where your creditors are weakest. Part of debt negotiation is knowing when to
start negotiating. Negotiating with original lenders is usually
best started when you’re around 90-days late. That’s a month or two before they look to
sell your debt to a collections agency so a lot of times, they’ll be willing to take
that $0.30 on the dollar rather than only ten cents from an agency. If you have debts already with a collection
agency, you need to understand the statute of limitations on debt in your state. That’s the amount of time, usually between
three to six years varying by state, that a collector can legally collect on a debt. We see here in a map from the site WalletHub.com
the statute of limitations on credit card debt for each state. So if you live in states like Mississippi,
New Hampshire or the District of Colombia, you’re in luck because companies can only
collect on that debt for three years. If you’re in Illinois or Iowa like myself,
you’re SOL because it’s up to ten years. Now this time limit starts after the last
payment you’ve made, not when you got the loan. If you make a new payment, even a partial
payment, then that starts the clock over. So if you haven’t paid on a debt for three
years and the limit on collections is four years, the agency trying to collect on that
debt is going to be extremely willing to negotiate. I’m not saying you always want to wait for
years, not paying that debt, just to give yourself bargaining power but it is an option. Of course, you’re probably thinking, if
you wait for years not making payments, why not just let that time limit lapse and not
pay the debt at all? Why even bother negotiating? Well, because that defaulted loan is going
to hang on your credit report and kill your score for five to ten years. In a minute, I’ll show you a way to get
the bad mark, those years you didn’t pay, taken off your report and boost your FICO
fast. You also want to strategize whether you’re
going to offer lump-sum payments for your debt or a payment plan. You can get bigger discounts, like paying
just 30% of what you owe, if you agree to send a check for that amount all at once. Offering to start a payment plan and you might
have to pay more, like 50% or 60% of what you owe. That’s what I did in 2009 when I renegotiated
my debt. I offered to cut them a check for 35% of what
I owed. Well, actually I started at 20% and then negotiated
from there but we’ll get to that next. Once you’ve got all this laid out, you’re
ready to start making some phone calls and negotiating your debt. Please, please, please do not skip those prior
steps. If you just skip everything and call your
creditors, asking them to take less than you owe, it isn’t going to work. They will know when you haven’t prepared
because you won’t know any of the info we’ve talked about and you won’t be ready for
any of their questions. The best negotiating strategy is what I call
the let’s be friends strategy. This is where you present yourself like you
want to be fair, you want everyone to come out with something. You start the conversation explaining your
situation, how an emergency forced you into this and you’re just trying to make it right. You explain that bankruptcy may be the alternative
if you can’t work something out and may be unavoidable but you’re trying to pay
what you can first. This sets your creditors up with a sense of
urgency. They’re thinking that they better get as
much as they can quickly before you file bankruptcy. Of course, there are other negotiating strategies. A popular one is the hard-line threat where
you go in arguing the debt wasn’t fair, maybe that you didn’t understand the terms
or that you were manipulated by the lender. You then put on the table as many demands
as possible and then start negotiating back from there. This is a favorite tactic of one famous negotiator,
sometimes it works and sometimes it flops. It’s tough making it work unless you are
in a position of power or have some kind of legal claim on your side but it’s another
strategy to consider. Speaking of demands, besides your overall
strategy, you want to have several small items for which you can negotiate. Just calling in asking that a lender take
less money is going to get a very quick one-word answer. A few of the things you can ask for besides
a discount in what you owe include; asking all fees to be waived, asking for bad marks
to be removed from your credit report including that the debt was sent to collections, asking
that the account be closed and marked as satisfied or paid as agreed on your credit report. This is all about having different things
you can give and take in the negotiation. If they say they will not write the credit
bureaus to have those missed payments removed from your report, that’s fine, you come
back with a lower offer on the debt. Maybe if they agree to all these items, you
agree to pay a higher amount. One thing you absolutely must remember in
all of this is to get everything in writing. Use an app on your phone to record the conversation
and get all agreements in writing before you make any payments. These collection agencies will screw you over
if you let them! DO NOT make a single payment EVER until you
get that signed agreement in the mail or email. It’s a long process negotiating debt but
please do not skip over it. Click that subscribe button and come back
to the video if you need to but do not pass up the chance to save thousands on your debt
payoff. Now 150 million Americans had their credit
report hacked last year and that was just from one hack. Next video, I’m going to show you step-by-step
how to freeze your credit so hackers can’t touch it. Make sure you click on that subscribe button
so you don’t miss the rest of the videos. Click on the link just below this video to
watch the entire debt payoff plan and get out from under your debt.

32 comments on “4 Steps I Used to Negotiate Debt and Save $6,500”

  1. Vlad Mercori says:

    Debt management is such a crucial subject, I wish more people would follow such videos and your channel and improve their financial education. Thanks for the video, man!

  2. Michael Jay - Value Investing says:

    Helpful tips! Hopefully after negotiating, people won't have to go through this situation again.

  3. Let's Talk Money! with Joseph Hogue, CFA says:

    Before you negotiate debt on your credit report, you might want to try disputing it if there is an error or the debt shouldn't be on your report. Check out this video for a template credit report dispute letter you can use. https://youtu.be/AGUZ5paqvCQ

  4. Get2dabag Bayboi says:

    Thank you

  5. Hank Coleman says:

    Great tips like always, Joseph. Thanks for sharing.

  6. Who Are U? - Podcast About Life at College says:

    Thanks for teach the basics of debt negotiation! I bet a lot of subs and non-subs found it helpful too 🙂

  7. Daniel Kopp says:

    Good practical tips here that everyone can put into use!

  8. ttwarrior1 says:

    Confused. Another vid u recommend consolidating. This u said don't

  9. roblox and more says:

    Subscribed, liked and saved, haven't even gotten to the meat of it yet!

  10. Richard Hart says:

    Should I use an attorney to negotiate a lump sum settlement on a Judgement creditor? I heard that they will still jerk you around even if your do it yourself after getting the paperwork and sending a lump sum payment? I have a garnishment and want to get a 50-60% reduction on the total. It is a Judgment by a law firm for a Discover Card.

  11. Sergio Estrada says:

    Would this work if with smaller debts too? Say around 4,000?

  12. Anthony Witchek says:

    Hey Joseph, thank you for this amazing content! I've taken the bate and signed up with a settlement company for about 26 month out of a 36 month program now. Can you refer me to anyone that help me get out from under the settlement company? Thanks in advanced!

  13. JamesNDelilah Pinckney says:

    I've missed the last 5 months of my credit card payment due to losing my job. They've given me extensions but I still haven't been able to pay haven't found full time work yet. When should I ask to settle? When they threaten collections, now, in another month?

  14. Jess Thompson says:

    I have three credit cards that are all maxed out. Two are 5K and one is 1500. Someone gave me a check for 5K the other day. Do you think I could pay it all off with the 5K?

  15. Mixxmee xo says:

    I went with clear advantage to consolidate my debts and canceled with them in 2 months. The fee was 25 percent of each debt settled and at first it sounded great 1 fee I pay each month and they take care of the rest but that 25 percent ended up being more than what owed. I'm not sure if I should just wait till it goes to collections and just pay it off for less

  16. MR.CUMUP says:

    I just negotiated a debt at 40% of the total amount, I asked and recieved a letter with their letterhead stating that I've paid this debt and I'm clear, I tried getting them to use language like "paid as agreed" but they wouldn't do it, however, the finance company said that it would take up to 60 days for my information to be updated with the bureau's, do you think that it would be a good idea to send dispute letters to the bureau's with a copy of their letterhead so that I know that my credit information will be updated in at least 30 days? Just dont want them to drag their feet after they've received their money.

  17. Jeremy Klein says:

    Hello, I have an account with Amex sent to Alltran that said has a 8k balance. Chase for 10k. Would it be realistic to settle for with AMEX for about 50%? Chase even less?

  18. MrRj600rr says:

    So I have to be 90 days late to start negotiations?

  19. JamesNDelilah Pinckney says:

    Should I negotiate the terms (removing bad marks, etc.) or how much I’ll pay fist.

  20. Willette Smith says:

    Does this work with debts that are in collections, but aren't credit cards?

  21. TheEddiematrix says:

    hi i have a question a judgment for $1,500 but they now asking $2,850 could settle for $500 or $1,000 and the judgment is not on credit report

  22. Anjana Devi Kumar MHT says:

    Thank you. Thank you. Due to my Contract role ending, I need to pay off my creditors soon! I am in debt with 4 creditors for $6K. I was going to contact debt consolidation company but my partner told me, he wouldn’t recommend it. I’m glad I came across your video. I’m going to contact creditors, I owe $1K to. Thank you, again! I’m hoping for positive results!

  23. Xavius Americus says:

    Holy cow! 1:18 minutes in and NO INFORMATION! C'MON DUDE!

  24. TheEddiematrix says:

    Hi i have a question about negotiation for a settlement with a debt buyer that years old i was wondering if i could Settle for $1,000 it old judgment of $1,400 but saying is now i own $2,840 and the court is reporting $1,400 and i don't have it on my credit report or on my public record just the court house i talked with a consumer protection attorney told me settle for less or file for bankruptcy what can i do ? Thank you i appreciate it

  25. Ryan Dillon says:

    How about negotiating with no late payments i.e. prior to the 90-day mark? Can you explain that you are having an incredible time paying it off and will soon be unable to?

  26. Johanna Dyer says:

    DUDEEEE , just TELL US HOW TO DO IT and stop talking useless stuff in the beginning

  27. B C says:

    before you even started. you put out misinformation! "these companies are useless and out to get what little money you have left" haha wow everyone truly has an opion. Yea debt negotiating doesn't work as well if you aren't legally represented. hahaha whatever your selling. be careful what you say to get people to listen to you. everyone is so gullible! This video is a joke! wow good work buddy on seeling your sevices!

  28. Jesse Gonzalez says:

    If we are not late on CC payments and want to pay them off in full does this apply as well? Can we get a lower pay off?

  29. Fred H says:

    Should i negotiate before my account gets charged off or after?

  30. Jesse Gonzalez says:

    Do you have to tell the cc company you are recording?

  31. PaleoPrincess says:

    I am bewildered at how many people are leaving comments on your video that are hardly decipherable… what are the odds that most of the people leaving comments on your video don't speak English properly… I'm not even sure how you knew how to answer them… they didn't use any punctuation and it usually made no sense.

  32. Embrace Bundles says:

    Hi, I was issued a judgment from Collection agency on 4/19/19!for a Capital One card in the amount of $2,991, the Collection-account is currently current due to making a $100 per month which started in April 2019. Bringing the current due amount to $2391. I would like to offer a settlement but how much should I offer ? Would they even take an offer if I’m already on a payment plan ?

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