If you are having difficulty paying your bills and keeping up with monthly credit card and loan payments – the fear of missed payments and a very bad credit score is likely to be largely looming over your head.
While you may choose to grin and bare it and keep doing what you’ve been doing – even with the real possibility of being behind on payments – another course of action you could choose instead is to call and discuss your situation with your creditors. With that being said, a question you may have asked yourself before is ‘can I negotiate with a creditor and will it actually have an effective outcome?? – perhaps even being skeptical that this would even amount to anything at all – so why bother at all, right?
Well then you may be happy to hear that sometimes, it turns out you can! If you have been struggling with credit card and other debts – and worrying about falling behind on making payments – then contacting your creditors may in fact prove to be a beneficial move – and this could be the difference between falling further into debt versus turning your financial situation around for the better.
That said, I’m sure you will also want to be aware of some important strategies and tips that can help you as you begin these negotiations, and as a result improving your chances of being successful in the end and having a real shot at rebuilding your credit.
Creditor Negotiation Tips:
Be Prepared
As it stands, creditors are very used to dealing with people calling and inquiring about these types of situations and therefore can be pretty sharp when it comes to evading these requests. As a result, you will want to have your points in order as you are stating your case, thus making sure they will be the most impactful.
Part of being prepared also means having an idea of what your budget will allow with regards to how you can reasonably afford to pay back. As you are dialoguing with these creditors, you can for example, explain to them that in order to be able to keep up with your regular bills, you will need to have some more leniency when it comes to paying back your credit cards or loans – and also so you can and get rid of some of your overall debt. Therefore, examining your budget and having specific facts and figures can help you as you explain your situation to said creditor.
Make Them an Offer
When it comes to paying off your debts, you will want to go into this conversation by letting creditors in on the plan you feel will help you to make a dint in your debt, yet also be able to pay them back to some degree. The specific offer you may make, for example could include, starting with stating that you intend to pay back 50 percent of the loan. This is typically a good ‘rule of thumb’ to include in your negotiations as creditors are unlikely to accept an offer below this percentage.
Overall, you can tell them that while you are unable to pay back the amount in full or the original amount – however you can pay a percentage of this total balance. A lump sum payment or payment plan may also be a good offer to make – ultimately however, you do want to be sure to have some method of repaying your loan already in mind – this will also let creditors know that you are in fact, commitment to sticking to your agreement.
Ask to Have Your Negative Credit Comments Removed
In addition to your proposed payment plan, you can also appeal to creditors to have your negative credit comments removed from your file – after your debt has been settled with them. This is a highly important step, as this will mean a rise in your credit score – as damaging credit comments can continue to drag this rating down even more significantly over time.
Speak to a Higher-up
In the event, your re-payment offers are rejected by the first creditor you have spoken to, your next step can be to ask to speak to a manager or someone higher up in the chain of command. Here you can discuss your situation with them in much the same manner as what you have previously done – also being sure to stress your willingness to come to an agreement. This again will demonstrate that you do have a plan to pay back a chuck of the money you owe.
Once again, the more precise you are about how much you can pay back, how much of a lump sum you are prepared to make, and/or the payment plan you are thinking will be the most manageable for you – the more a creditor will take you seriously and not view you simply as a borrower who is trying to manipulate them in order to get out this predicament, without making an effort or taking any responsibility.
Include the Word ‘Bankruptcy’ in Your Negotiations
If you find you are really not getting anywhere with either of these individuals, to help sway your creditor you can opt to slip the word ‘bankruptcy’ into the conversation. This is a strategy that can sometimes advance the situation in your favour – as creditors are highly aware of the fact that, in the event you do end of having to file for bankruptcy, then they receive nothing whatsoever from you in the way of a repayment.
While, of course bankruptcy is not the outcome you really want – it may help you negotiate your repayment offer – and if you plan to pay back 50% of your loan – then as it stands in the eyes of the creditor – this plan is more likely to look better to them than the bankruptcy route.
Get the Agreement in Writing
After all is said and done – and you find you have been able to successfully negotiate a payment plan with your creditor – next is to ensure it will hold up. Therefore, it is wise to then obtain this agreement in writing as having a signed paper copy of this arrangement will serve as a record of these negotiations and it is less likely it can be altered or dismissed even, by a creditor, over time.
While this type of situation can be highly nerve-wracking, you may find that as you prepare to enter into negotiates with a creditor, you can rely on these tips to help you step up your game and negotiate your personal financial situation to the best of your abilities.
While creditors can be experts in their own right – so can you. First of all, be prepared and have a plan. Furthermore, you don’t be afraid to insert some key words and phrases into the conversation, as well as expressing some specific points regarding your debt levels and what you can manage to pay back. In the end, even though you didn’t believe speaking to a creditor would actually amount to anything, it can turn out to be a highly effective course of action – one that can allow you to reach a more positive debt-relief outcome.
