By Chris Kramer
Many debtors may not realize that they have negotiating power with their creditors even after their accounts have gone to collections. In dire financial circumstances, filing personal bankruptcy may be the best decision, but it can often be avoided.
John Ulzeimer, vice president of the After Bankruptcy Foundation, claims "Collection agencies have an incentive to collect something from your account. You have leverage to offer them some sort of settlement."
According to MSN, debtors can often negotiate to receive a lump-sum settlement of debts, or a low or zero-interest repayment plan. Ulzheimer recommends composing a contract of any such agreement, so that a debtor can later have evidence of the terms of the repayment plan to present to credit agencies.
Having an account go to collections can stay on a consumer's credit report for seven years, the news source reports, but a bankruptcy filing can stay on one's credit report for longer.
Once an account has gone to collections, debtors and creditors may have a common interest to settle the debt, and such a scenario may give a debtor bargaining power to pay a smaller sum or make more affordable periodic payments.