How much to offer to settle debt?

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Thinking about debt settlement in Canada? Aim to pay 20-70% of what you owe, based on factors like debt age and creditor type. Older debts might settle at 20-30%, while newer ones could require 60-70%. Start with a low offer if possible, and consider a lump sum if available. For a government mandated debt program like a proposal, you’ll only pay 30-40% of your debt. Consulting a Licensed Insolvency Trustee can be helpful, but remember, not all trustees can be trusted. Reach out via phone, text, or live chat if you have any questions.

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Debt Settle Offer Question

How much to offer to settle debt? I’m negotiating a debt settlement and would like guidance on what percentage of the total debt is reasonable to offer.

From: Anonymous Question
Location: Saanich, British Columbia (BC)
Category: debt settlement

Debt Settle Offer Answer

If you’re thinking about negotiating a debt settlement, you’ll typically want to aim for covering 20% to 70% of what you owe. A bunch of factors can influence where in that range your offer lands, like how old the debt is, who the creditor is, what kind of debt it involves, and what your financial picture looks like. Debts that have been around for a while might settle for 20% to 30%, while more recent debts could see you offering 60% to 70% if the lender is feeling stubborn. It’s often smart to kick things off with a lower offer, especially if your debt is small or almost at the cutoff point for collection. Plus, showing just how tight money is right now can really help your case.

Make sure you have a clear understanding of where you stand financially when heading into these talks. If you’ve got the chance to offer a lump sum, particularly if you’ve come into some cash unexpectedly, that can be a game-changer. A chat with a Licensed Insolvency Trustee could be beneficial, although keep in mind that not all trustees have your best interest at heart. They can help map out a consumer proposal, potentially knocking down your debt to between 20% and 50%, making repayments more manageable. If you’ve got queries, feel free to reach out through phone, text, or live chat.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

In a debt settlement negotiation, a reasonable offer typically ranges from 30% to 70% of the total debt amount, depending on individual circumstances such as your financial situation and the creditor’s policies. Creditor willingness to accept less often increases if you are facing financial hardship or can make a lump-sum payment. It is advisable to begin negotiations at the lower end of that range and adjust based on the responses you receive. For consumer proposals or bankruptcies, refer to the Bankruptcy and Insolvency Act, specifically sections regarding proposals (sections 50.4 to 50.7) which outline how proposals are structured and accepted by creditors.

For more specific guidelines on debt settlement offers, secondarily review the regulations regarding the conduct of trustees and creditors under the Act, such as C.R.C. c. 368 and SOR/2007-256.

From: OSB Helper

Related Questions to How Much To Offer In Settle Debt

Here are the top 5 most frequently asked questions related to “How much to offer to settle debt?” in the context of Canadian debt and insolvency:

1. What percentage of debt is typically accepted in a settlement?

A typical debt settlement can range from 30% to 70% of the owed debt[1][3][5].

2. How do I determine the right amount to offer for debt settlement?

The amount depends on your financial situation, the type of debt, and the creditor’s willingness to settle[1][3][5].

3. Can I negotiate a debt settlement on my own, and if so, how much should I offer?

Yes, you can negotiate on your own, but the offer should be based on your financial ability to pay, and it’s advisable to have a lump sum available[4].

4. How does a debt settlement compare to a consumer proposal in terms of the amount owed?

A consumer proposal can reduce your debt by up to 80%, while a debt settlement is an informal negotiation that can vary widely[2][4][5].

5. What factors influence the amount creditors are willing to accept in a debt settlement?

Factors include who holds the debt, the age of the debt, and the skill of the negotiators, as well as the creditor’s belief in recovering some money[1][3][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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