This question is about Wells Fargo How do I negotiate a debt settlement with Wells Fargo?
@mg_mccormick • 04/30/20 This answer was first published on 04/30/20. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is
not provided, reviewed or endorsed by any company. In order to negotiate a Wells Fargo debt settlement, you need to contact either Wells Fargo or the collection agency assigned to your debt. You can determine whom to contact by consulting the most recent notice you’ve received. Generally, if your debt is less than 180 days delinquent, you will negotiate with Wells Fargo directly.
Otherwise, you will be dealing with a collection agency. In either case, you will need to provide an explanation for why you are unable to make minimum payments on your account. Creditors and collection agencies will be most sympathetic to situations that relate to financial hardship, including unemployment or injury that prevents you from earning income, among others. Once you have answered all questions related to your debt, you can begin the negotiation process. Once negotiations begin,
you can make an offer based on the settlement amount you can afford, both in terms of a lump sum and monthly payments. Only accept a settlement you can afford and make sure you obtain a signed agreement. You can follow the steps below to negotiate a settlement on your Wells Fargo debt. 1. Pick a Debt Settlement Company or DIY Debt Settlement Before debt settlement can begin, you need to decide how you want to approach it. You can either employ a debt settlement
company or pursue do-it-yourself debt settlement. While debt settlement companies will bring an added layer of expertise to your negotiation, you should decide if their know-how justifies the fees they charge. If not, you can save money by settling your debt yourself. 2. Do Your Homework Research the party
you’ll negotiate with; knowing what to expect will set you up for a more favorable outcome. If you’ll be doing the negotiating, rehearse the conversation and prepare responses to questions about income, expenses, and the situation that created your inability to pay. Additionally, do the math on your settlement to make sure you’ll still save money after fees and taxes. 3. Initiate Contact At this point, you can reach out to the party responsible for your debt to begin
negotiations. If Wells Fargo is still handling your debt, you can call their Account Management department, at 1-800-642-4720, or sign into your account to send a secure email. Before you can discuss a settlement, customer service will
probably offer you some debt management solutions in the way of lowered interest rates and minimum payments. If you are not interested in these debt management solutions, you may request debt settlement. Be prepared to answer the questions related to income, expenses, and your inability to pay. 4. Begin Negotiations When
you make your initial offer, make sure to leave room for negotiation, as you’ll almost certainly receive a counteroffer. You can generally expect Wells Fargo to settle for 30% - 40% of the original balance. But once again, do the math to make sure you can afford the proposed settlement. Finally, once you’ve reached an agreement, make sure to get a signed debt settlement agreement letter. This will ensure all parties involved follow the rules of the settlement. After you settle your
debt, it’s important to develop good financial habits that you can adopt permanently. Start by creating a budget that allows you to live within your means and pay your monthly bills on time. With good habits like these in place, you can expect to see your credit recover in 1 – 2 years. Mary Grace McCormick, Credit Writer
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What percentage of a debt is typically accepted in a settlement?
The percentage of a debt typically accepted in a settlement is 30% to 80%. This percentage fluctuates due to several factors, including the debt holder’s financial situation and cash on hand, the age of the debt, and the creditor in question. The debt settlement company you decide to work with plays an important role, too.… read full answer
For example, National Debt Relief has been able to settle debt for as low as 30% of the original balance, but could charge fees as high as 25% of that original balance. Additionally, while Donaldson Williams may reach a settlement as high as 60%, their fees are low at 17%. A few of the highest ranking debt settlement companies are listed in the table below.
Percentage of a Debt Typically Accepted in a Settlement:
Company | Average Settlement Amount |
National Debt Relief | 30% - 50% |
Pacific Debt Inc | 39% |
Donaldson Williams | 40% - 60% |
New Era Debt Solutions | 43% |
Debt Relief Á la carte | 43% |
Accredited Debt Relief | 50% |
DMB Financial | 50% |
CuraDebt | 50% |
The percentage of a debt accepted in a settlement depends on:
Your financial situation. In the process of negotiation, creditors will try to ascertain your financial situation and amount of cash on hand. Greater disposable income and available cash will generally lead to a lower percentage of forgiven debt. This makes sense; creditors want you to pay off as much debt as you can. It would be hard for you to make a case that your debt should be written off when you have the means to pay a decent portion of it.
How old the debt is. The older your debt is, the more likely it is that creditors will regard it as uncollectible. When they view debt as uncollectible, they’re more likely to accept a favorable settlement percentage. For them, getting some of the debt back is better than nothing. It’s important to note that while an older debt increases the likelihood of a favorable settlement outcome, it comes at the expense of your credit. You can read more about how debt settlement hurts your credit in our guide.
The creditor. During the debt settlement process, you will negotiate with either your original creditor or the collection agency assigned to your debt. If your account is over 180 days past due, you’re more likely to interact with a collection agency. Neither party has an obligation to settle debt, so whom you negotiate with plays an important role in the ultimate settlement percentage. It’s a good idea to do some research on the party handling your debt before beginning negotiations. You’ll learn more about their approach to debt settlement and others’ experience with them. The Better Business Bureau is a good resource for your research.
Bottom Line:
The typical percentage of debt accepted in a settlement depends on the debt settlement company you decide to work with (if any), your finances, amount of debt, and creditor. There’s nothing you can do to change your financial situation, but you can tailor your approach to the negotiations.
Before negotiations begin, use the credit card(s) in question only for essentials and attend a credit counseling session to learn about your options. This will show the creditor that you are acting in good faith and only pursuing debt settlement as a last resort. This will go a long way in improving your chances for a more favorable debt settlement.
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Is debt settlement worth it?
Debt settlement is worth it when a fair settlement can be reached quickly, allowing the borrower to satisfy their obligation for less than the full amount due by making a lump-sum payment that they can comfortably afford. It’s best if the borrower does not need a good credit score for anything important, such as a mortgage application, in the months that follow, either. But debt settlement involves an enormous amount of risk. There’s the risk that creditors won’t agree to a settlement, since they have no obligation to settle. There’s also the risk that they’ll sue the debt holder for payment.… read full answer
Only about 10% of debt settlement cases are successful. When a settlement can’t be reached, debt holders are still responsible for the entire debt, unless they pursue an option like bankruptcy. There are a few scenarios in which debt settlement may make sense and therefore be worth it, however.
When Debt Settlement Could Be Worth It:
When you’ve explored your options through credit counseling. If you’ve explored all your options for debt resolution through credit counseling and feel debt settlement is your best option, it could be worth it. A counselor at a credit counseling agency can use your financial documentation to present you options and develop a debt management plan. Since the initial consultation at a credit counseling agency is generally free, you really have nothing to lose.
These debt management plans are generally preferable to debt settlement, as they do less damage to your credit. An important exception is when you can’t afford the monthly payment under the plan. If that’s the case, debt settlement might be the better route to take.
When you’ve already missed payments. If you’ve missed payments, debt settlement could be worth it. You’ve essentially started the debt settlement process by allowing your accounts to become delinquent. It’s not wise to stop payments intentionally, as this lowers your credit score, but settlement could be a way to make the best of such a situation.
When the math makes sense. If you can save more in debt forgiveness than you spend in fees and taxes, debt settlement could be worth it. If you use a debt settlement company to negotiate with your creditors, make sure you have a clear understanding of their fee structure. Once you know how much of your debt will be forgiven, you can also estimate how much federal tax you might owe based on this portion.
When you have enough money to settle. If you have enough money to make an attractive settlement offer, debt settlement could be worth it. Since creditors have no obligation to settle, they will be more likely to agree to a settlement when you have enough cash on hand for a lump-sum payment.
When speed of resolution matters. If resolving debt fast is an important factor, debt settlement may be worth it. When comparing it to debt management and Chapter 13 bankruptcy, you can save at least a year when you pursue debt settlement. It’s important to note that Chapter 7 bankruptcy can resolve debt problems in 3-6 months, so debt settlement is less favorable in that matchup.
When you don’t mind damage to credit. If you don’t mind damage to your credit, debt settlement may be worth it. Credit damage is inevitable with debt settlement, first as a result of missed payments, and ultimately through the reflection of a settlement in your credit history. If credit damage does not faze you, debt settlement could make sense as a means to resolve your debt.
Bottom Line
Debt settlement is worth it when the risks and rewards align with your priorities. The process of debt settlement will send your credit into a nosedive and ruin your relationship with your creditors. You also risk getting sued and the creditor refusing to settle. On the other hand, you could potentially resolve your debt problems by paying a fraction of the amount owed. Compared to debt management, you could save years in time and thousands in cash. It all comes down to your circumstances.
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