People who are behind on paying their monthly bills and constantly getting phone calls will find that many debt collectors will work with you. Everyone wants to get paid and negotiating with creditors is important in reaching that goal. There are tips for making the negotiating with creditors easier along with stopping the menacing phone calls. The tips below are to help you talk with them.
- Why it is a good idea in negotiating with creditors
- Deal with creditors not debt collectors, creditors will more than likely work with you though various lower payment options. Debt collectors are just that their goal is to collect the money that is due for the company they are working for and the best interest of any consumer is furthest from their minds.
- Negotiating with creditors and/or lenders may lead to lower interest rates on the money owed to them.
- The creditor or lender will provide a negative report on a monthly basis to the national credit score bureau but they do have the choice on how negative the report is even though the reporting is only voluntary. This will pull your credit score down and take any chance of getting a descent loan in the future.
- People should only agree to payments that they can afford in a financial budget.
- Seven key tips to discuss while negotiating with creditors
- Do not be dramatic stick to the facts of why you cannot pay the loan back or the current payments. In others words, be truthful about the hardship you are personally having but they do not want to know your lives story. A few good sentences that can get you started on negotiating with creditors are below:
- “I have been critically ill, the past several months and have fallen behind on payments. So I have not been able to work and now I am in remission so I trying to get back on track with my payments.”
- “My company has down sized and I have lost my job. I am looking for employment and I have not started receiving unemployment. I do not have the money right now to make the payments.”
- “The interest rates have gone up and I cannot afford to pay the monthly payment and I have taken a considerable cut in pay so I will not be laid off. I have met with a bankruptcy attorney to discuss if I should file or consolidate payments.
- Get professional help if you are having financial problems through a credit counseling agency. They will help work something out with the creditors.
- It is important to get everything in writing even with computers. A paper trail is better to have because you never know when the information in its memory will get lost or compromised. Always have an extra copy also just in case the creditors try to take more of a legal action about the payment.
- Know what your financial status is when you make a request about payment amounts. If the request is denied ask to talk with the supervisor immediately to find out why.
- Have the creditors waive any late fees, penalties or legal fees on the loan.
- If possibly try to have a settlement that would allow a reduced balance which is at least 50 to 75 percent of the amount owed on the loan.
- Setting up a payment plan over an extended period to pay off what is owed and at the same time no added interest rates, penalties, late fees or legal steps.
- Know the underlying debt before negotiating with creditors. There are different types of unsecured and secured loans that can be negotiated when it comes to making payments but not all of them. Here is a list of the different kinds and the negotiating with creditors is different for each one of them:
- Home loans and mortgage modifications are hard to get through negotiating with creditors. In many cases the home owner is left with late mortgage payments, a pile of fees and interest that will need to be paid immediately or a possibility of foreclosure.
- Student loans for colleges and universities that are taken out by the student along with their parent(s) are another one that is hard to have any type of leverage when negotiating with creditors. However, there are governments programs which help reduce the payments over a long time sometimes as much as 25 years, deferment until the student graduates and then have six months to find employment to pay the loan back with a payment plan. There are also programs by the government that even cancel the loan(s) but these are diminishing because of the unbalance of the economy. You would need to check yearly about this because it is constantly changing.
You should note that the laws for banks and credit unions are a bit different when it comes to settling the debt. Credit unions may use a cross-collateralize process which makes it hard for negotiating terms of repayment.