How To Negotiate With Creditors
Posted on May 6th, 2010 in Debt Assistance | No Comments »
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If you have got into arrears with your debts then it is essential that you resolve these issues as quickly as possible if you are to avoid the darker side of unpaid debt such as court proceedings or visits from the bailiff.
Fortunately, while getting into arrears is never fun with the associated stress of letters and phone calls chasing you for payment, it is generally possible to negotiate with your creditors in order to get your payments back on track and resolve the issues you are having.
After all, while the companies you owe money too would rather you paid them exactly what you owed, using debt collectors or the courts is not only expensive and annoying so most creditors are willing to negotiate with you. And when you know what you are doing, you can often come to an arrangement surprisingly easily which will put your mind at rest.
The main aim of the creditors is to ensure they get the money that they are owed. So long as they feel comfortable that they will eventually receive it, they are often willing to lower your monthly payments to a level that is managable for you, knowing that the interest you will pay on the outstanding debt makes such a move worthwhile.
So if you have unpaid debts and are losing sleep over the situation, what can you do to resolve the situation?
There are really four keys to success in my experience, so let’s look at each of these in turn.
1) Ring Early
Don’t wait to negotiate until you have bailiffs at your door. The sooner you contact your creditors, the more they can likely do for you. So if you know you won’t be able to meet your next payment, try to contact your creditor before this even becomes due or at worst as soon as possible after the due date.
Also, whilst many people (including me) hate to use the phone, this is how I recommend you contact your creditors if possible. Communication via email or post can take time; and that’s time you don’t have. So grab your latest letter from them, find your account number and their telephone number, bite the bullet, and ring them up to explain the problem. You will normally be able to come to an arrangement within minutes in this way and can then relax.
2) Be Genuine
Don’t just tell your creditors you can’t pay them but explain why, and what you have done to try and resolve the situation. Explain that you *want* to pay and that you *will* pay one way or another, but that you are having problems right now. Aim for the sympathy vote, and also aim to illustrate that you are a person of your word and can be trusted if only they will give you a hand.
3) Offer Something Upfront
For best results, don’t just tell your creditor that you can’t pay anything at all. After all, many of these people have targets to meet so if you can pay them something – anything – over the phone they will be far more willing to listen to your case.
Let’s say you owe them $100 and it was due last week, yet you only have $50 you can spare. Offer to pay this over the phone, on the spot, as a sign of goodwill. This will almost always help your case before you discuss reducing your payments.
4) Set A Budget
Before you ring up, try to work out what you *can* afford to pay on a monthly basis. Try to be realistic because you don’t want to renegotiate your debt only to fail to pay the first sum of money owed. Equally, try to offer as much as possible to not only pay off your debt faster for your sake, but the creditor will be far more accommodating if the sum you are offering up is reasonable.
Try to ring up with a solution or workable plan of how you will pay the money off. Maybe you need to reduce your monthly payments, or break up one big payment into smaller payments over a period of time. Just have a plan to suggest, and many creditors will take it, especially if you have followed the other recommendations laid out here.
Finally, once you have agreement on your rearranged debt, take the name of the person you spoke to plus any reference number they may give you, keep a note of the date and time you spoke to them and ask them to put the agreement in writing to you so that you have something concrete to go back on just incase.
That’s it, you’re done! Now go and do something nice as a treat after all that stress. You’re free and stop worrying!
