Far too many people wait too long to try to work something out with creditors. The best time to restructure an agreement is before you get into trouble.
In other words, the moment you see trouble on the horizon is when you need to get in touch with the people you owe and try to work something out. These tips for negotiating with creditors will help you get the process started.
Figure Out What You Can Do
Before you contact your creditors, stop and assess your financial situation realistically. Don’t look at what you hope you can do, you need to know what you can really do, so you can offer terms you can meet.
Reaching an agreement with a creditor and failing to hold up your end can put you in worse shape than you were before. So, look at what you have coming in, figure out what you need it to cover, and then work accordingly.
Some of the possibilities include a lower interest rate, a repayment plan, consolidation, or debt forgiveness.
Negotiate with Creditors Rather Than Collectors
This goes back to acting at the first signs of trouble. There are some significant advantages to trying to work out a deal with the people you owe — as opposed to someone who bought the debt and is just looking to get whatever they can get out of it.
Creditors have a vested interest in getting back the money they lent you. Approached properly, they may well be willing to work with you, whether it’s restructuring your payment schedule, lowering your interest rate, etc.
Acting early can also help you avoid being sent to collections, which can have a very significant impact on your credit score. The professionals at Freedom Debt Relief can explain this in more detail.
Be Honest/Do Not Lie
Chances are the individual with whom you speak will do some background checks to ensure your story adds up. Be consistent in terms of what you tell them. Be honest about your situation and don’t hold anything back.
You don’t need to give a play-by-play account of what happened and why you’re in this position, but you do have to let them know that things are going sideways and you’re trying to get out in front of the problem.
You’ll also want to avoid getting emotional. Some people on the other end of the line might treat you condescendingly. It’s important to keep your goal in mind and not let them make you blow your smooth.
Be Persistent—And Polite
You’re probably not going to get to the person you need to reach with your first call. The system is designed to make you decide if this pursuit is worthwhile.
Ask to speak to a manager and keep calling and asking until you get to someone with the authority to hear your proposal and act upon it.
Keep written records of each call, making it a point to get the name of each person with whom you converse. Make sure you have all the information about the debt you need in front of you so you can discuss it from an informed perspective.
Once you’ve reached an agreement with the creditor, ask them to send you all the details you discussed in writing, so you have documentation. People change jobs, get laid off, and even being fired.
You don’t want to have to start over from scratch if the person with whom you negotiated leaves the company. Having the agreement in writing can protect you from this possibility.
These tips for negotiating with creditors will give you the best shot at working something out. Ideally, you’ll catch the problem early on, reach an equitable agreement to which you can live up, and put these troubles behind you.