Be Firm When Telling The Creditor What You Can Afford

Category: Finance, Credit.

Your negotiating strength comes when the creditor or collections agency realizes that your only other option is probably bankruptcy, where the creditor will get much less, or nothing at all from you.

Here are some suggestions for negotiating with your creditors: Communicate your problems. It is in the creditor s best interest to keep you from filing bankruptcy. Let your creditors know about any financial setbacks you ve experienced recently. Your ability to negotiate is strengthened if a creditor realizes that the reason for your situation is due to a serious hardship. Detail your difficulty such as a job layoff, death in the family, car repossession, serious medical problems, home foreclosure, etc. Be firm when telling the creditor what you can afford.

Don t be intimidated into offering more than you can honestly pay now. If you owe the car mechanic$ 1, 000 but can only pay$ 600 over the next year- state that- and be firm. In addition, ask the creditor for a better deal than they initially offer. Be firm when you negotiate with a collections agency. For example, if you re three months behind in your credit card payments and the bank agrees to waive interest on one month, ask them to waive two month s interest. If a collections agency says they can only agree to your paying$ 100 on your account, and you can only afford$ 50, don t agree to pay the$ 10A collections agency represents the creditor and must always check with their client when negotiating payments. Offer a cash settlement.

The client may accept your lower offer. If a creditor will allow you to pay off the debt in installments, he/ she may be willing to settle for 50- 75% of the amount owed, if you make one lump sum payment. To be more persuasive, you may need to give your creditors certain information. Realize it is up to you to convince your creditors to accept the payment plan. Provide them a list of your monthly expenses, and a proposed, including your debts installment plan. There are three types of installment plans: .The first is self- negotiated, where you contact your creditors directly. .A credit counselor administers the second. .The third is the wage earner s plan, or bankruptcy court- administered plan