Tips on Negotiating With Creditors
You are most vulnerable at this time. Be sure you truly understand any new loan terms and can afford to make the payments under a new agreement.
- Get outside help negotiating if you need orwant it.
- If you’re told “no” in response to anyrequest, ask to speak to a supervisor.
- Adopt a plan and stick with it. If you owe$1,100 but can’t afford to pay more than$600, don’t agree to pay more.
- Try to identify the creditor’s bottom line. Forexample, if a bank offers to waive twomonths’ interest if you pay the principal dueon your loan, perhaps the bank will actuallywaive three or four months of interest. If youneed to, push it.
- Don’t split the difference. If you offer a lowamount to settle a debt and the creditor proposesthat you split the difference between ahigher demand and your offer, don’t agreeto it. Treat the split-the-difference number asa new top and propose an amount betweenthat and your original offer.
- Don’t be intimidated by your creditors. Ifthey think you can pay $100, they will insistthat $100 is the lowest amount they canaccept. Don’t believe them. It’s fine to hangup and call back a day later. Some of thebest negotiations take weeks.
- Try to settle with a lump sum. Many creditors will settle for less than the total debt if you pay in a lump sum, but will insist on 100% if you pay over time. If so, try to get the money to settle the matter. (See Chapter
1, Section C.2.)
Get a signed release. If you settle for less than the full amount owed, make sure the creditor signs a release stating that your partial payment excuses you from the remaining balance.
Be careful not to give up more than you get. A creditor may waive interest, reduce your payments or let you skip a payment and tack it on at the end. But tread cautiously. The creditor is likely to ask for something in exchange, such as getting a cosigner (who will be liable for the debt if you don’t pay, even if you erase the debt in bankruptcy), waiving the statute of limitations (the number of years the lender has to sue you if you stop making payments), paying higher interest, paying for a longer period or giving a security interest in your house or car.
Taken From : Credit Repair by Attorneys Robin Leonard and Deanne Loonin
