How to Break a Debt Settlement Agreement

As long as you did not give the creditor or collection agency your bank account number when you negotiated a debt settlement agreement, then getting out of that agreement should be fairly easy. A debt settlement agreement is an agreement for you to pay a certain percentage of the unpaid debt to the lender or collection agency within a certain time frame. It is not the same as renegotiating the date, amount or interest rate on your monthly debt payments or paying the full amount of a debt on a negotiated payment schedule.

Instructions

1. Call the lender or collection agency and let them know that you have changed your mind about the agreed settlement.

2. Miss the payment date, and don't send any money to them.

3. Wait to hear from them or their lawyer to determine your next steps.

Tips & Warnings

• It may be difficult to get a company to renegotiate a second settlement, if you have already broken the first one---especially if you are trying to get a lower settlement amount.

• A lender or collection agency usually won't sue you if they think they can get you to pay your debt using a different strategy, according to Justin Harelik of Bankrate. Breaking a debt settlement agreement may leave them no other choice but to sue.

References

• Bankrate: Taken to court for credit card debt

Resources

• MSN Money Central: When Debt Settelement Makes Sense