Negotiating with creditors is not an easy task. They are notorious for being unscrupulous when it comes to collecting what is owed to them. Creditors may be pushy, intimidating or downright rude in their attempt to collect their payments. While it's important to honor your financial and legal obligations, it's just as important to protect your own interests in the process.
Considering debt can limit your financial stability, drain your bank account and make it impossible to obtain new credit, understanding what you need to do to negotiate with creditors and how the process works can make the negotiations much more bearable. Negotiating with creditors can allow you to pay off debt in a reasonable amount of time under a sustainable plan and can even allow you to negotiate lower interest rates on what you owe. Debts that can be negotiated include:
- Personal loans
- Store cards
- Medical bills
- Bounced checks
- Student loans
- Credit cards (unsecured)
Steps for Negotiations
First and foremost, your ability to negotiate with creditors depends on how much leverage you have with which to negotiate. Usually a creditor is open to negotiate the payment of debts to some extent because they want at least some, if not all, the money owed to them. The following steps will help ensure a pleasurable outcome during negotiations.
- Before you begin negotiations, you will need attainable expectations. Set clear goals with your attorney. They will help you understand what the likely outcome will be in your particular situation.
- Be able to clearly explain what you plan to do to fix the problem and how you will do it. Creditors will be more likely to accept your offer if you take the initiative to solve the issues prior to the negotiation meeting.
- In order to be more knowledgeable and prepared, take the time to brief yourself on the facts involved in the negotiating process. Make sure your attorney is involved during this step.
- To avoid mistakes or potentially forgetting information, have your attorney write down all the questions and thoughts you have regarding the dispute.
- Understand the offer clearly and read through a description of the details to prevent miscommunication before signing or agreeing to anything.
- Even if the creditors become rude or misleading, always be courteous and polite during this stage of communication.
- The goal at the end of negotiations is to reach a mutual decision. Don't agree to anything you can't reasonably do. Once a solution has been agreed upon, you must keep to your part of the bargain.
The process will ultimately depend on how far the creditors are willing to negotiate. Always remember, however, that regardless of how long negotiations last, that you have rights under the Federal Fair Debt Collection Practices Act that protect you from abuse or unfair collection practices. Contact the Federal Trade Commission if you believe that a creditor has violated the law in its dealings with you. Your attorney will also be available to help ensure fair and just collection practices during negotiations.