Oklahoma offers a wide range of relief alternatives for debt-burdened residents. Most people are familiar with bankruptcy, as the most convenient avenue to get creditors off your back. However, debt settlement is also a great alternative if you are willing to negotiate.
It is almost impossible to get the process wrong if you work with Oklahoma City bankruptcy lawyers. Unfortunately, many people make mistakes with the debt settlement process and mess up their finances completely. And in most cases, it is impossible to reverse the impact.
What Mistakes Can I Make if I Don’t Understand a Creditor’s Strengths?
Failure to note a creditor’s strengths is why many people go into negotiations blindly. Understanding this aspect helps to know how far to push for a deal. Remember, secured creditors can take back the asset used as collateral, and unsecured creditors can take back their merchandise.
Unsecured debtors can also:
- Levy your bank accounts after a lawsuit
- Garnish your wages after a lawsuit
- Sue you
- Call and send letters
So, before discussing settling a debt for less than what is owed, make sure that you understand the creditor really well. Their strengths might determine how low they can go. An experienced Oklahoma debt settlement attorney can help with this.
What Mistakes Can I Make if I Don’t Understand a Creditor’s Shortcomings?
If you don’t know a creditor’s shortcomings, it might be impossible to predict how much they can take. Their weaknesses can give you an upper hand in debt settlement negotiations. Both secured could be limited by the following factors:
- A lawsuit has a lot of cost implications on them
- Federal and state collection laws limit their debt collection tactics
An unsecured creditor might have many more weaknesses than the secured one. For instance:
- They often unable to repossess merchandise
- They have more to lose if the debtor files for bankruptcy
These weaknesses reduce creditors’ negotiating power and enhance their willingness to settle at a lower value. If you note this, you can easily use it to your advantage.
What Money Should I Avoid Using to Settle Debts in Oklahoma?
Creditors tend to settle faster and for a lower amount with cash. So, debtors often make the mistake of doing a quick fund transfer from the wrong accounts to settle the money owed. As tempting as it might be, you might want to avoid paying debts using:
- Your retirement funds
- Equity in secured assets for unsecured debts
The downside of getting funds from a retirement account is that you will still have to repay the money if taken as a loan. If not, you will pay hefty taxes for the withdrawal. Similarly, taking a car or home equity loan for debt settlement is a far bigger risk.
What Mistakes Can I Avoid During Negotiations?
Before accepting a debt settlement arrangement, it is essential to look at the bigger picture. You should look at all your debts and examine your ability to pay at least half of them. There is no point in spending thousands of dollars in an attempt to settle, only to end up filing for bankruptcy eventually.
It is also important to take notes during negotiations because creditors sometimes give conflicting information. You can always refer to the figures in working out the various possibilities before reaching an agreement. A skilled Oklahoma debt settlement attorney can represent you and advise you on whether debt settlement is the best option or not.
How Can I Avoid Paying Too Much in Debt Settlement?
Knowing how high you can and can’t go prepares you for an effective debt settlement process. A self-assessment guides you on what you can afford to pay for a particular debt. However, the figure should be realistic depending on the circumstances.
For secured creditors, 50% or higher might be acceptable. On the other hand, most unsecured debtors would agree to any amount because they risk getting nothing. Therefore, you can start the negotiations low but not exceed 50% of the remaining debt. An experienced Oklahoma debt settlement attorney can guide you on how to go about it.
How Do I Avoid the Negative Credit Effects of a Debt Settlement?
Debt settlement in Oklahoma often doesn’t come with the adverse credit score effects of bankruptcy. Despite the creditor agreeing to a lower repayment amount, it is as if the debt is settled in full. However, failing to adhere to the new debt settlement terms can harm your credit score.
Debtors are therefore discouraged from negotiating for a deal with terms they won’t be able to meet. A missed payment under the new arrangement could significantly affect your credit score. A debt settlement attorney in OKC can advise you on safeguarding your credit score while getting rid of the debts.
Is it Okay to Go into Debt Settlement on My Own?
While you could try tackling debt settlement by yourself, you could be better off receiving guidance from an experienced legal expert. A financial relief lawyer in OKC understands how the process works and is equipped with tactics on convincing a creditor to give you the best possible deal.
They can help you list reasons you are behind with payments – it could be medical bills, divorce, or job loss. Note that the offer might be rejected the first few times because creditors’ representatives are tasked with getting the most out of a settlement. But an experienced attorney can make persistent calls on your behalf and remain consistent with your hardship story.
Attorneys Fighting for Your Financial Freedom
The biggest mistake with a debt settlement is failing to document the agreement in writing. You might have to deal with the same debts all over again. It is generally easy to get many things wrong without an experienced lawyer to guide you.
Our skilled attorneys can give you heads-up on the mistakes to avoid, and even represent you at every stage. Speak to us today to discuss debt relief in Oklahoma.