5 Effective Strategies for Negotiating With Creditors

If you’ve fallen on hard times and find yourself behind on your bills, it might be time to negotiate with some of your creditors. Although that might seem like a daunting task, you’ll find that many creditors are more than happy to discuss options with you until you get back on your feet.

Here are 5 effective strategies for negotiating with creditors.

1. Avoid Drama

The person you talk to wants to know if you’re in a legitimate hardship situation. However, you don’t need to offer an excessive amount of drama with your story.

Explain exactly what happened from a factual perspective. If you lost your job because the company went through layoffs, say that.

You don’t need to go into detail about how your brother-in-law promised to hire you or loan you some money and then he changed his mind because he had a falling out with your spouse. That kind of detail isn’t necessary and won’t get you any relief.

Remember: just the facts.

2. Ask Questions

Part of negotiation is asking questions. If the customer service rep that you’re speaking with is telling you that a lawsuit is on the way, ask when you can expect to be formally notified about it. If you’re going to reported to the credit bureaus, ask if there’s anything you can do to avoid that.

Make sure you keep your cool during the negotiation process as you’re asking these questions. If you come across as someone who’s calm and polite then your creditors might be more willing to work with you.

3. Know Your Situation

If you’re willing to make some kind of a payment to your creditors then you want to know what you can afford before you talk to them. Maybe your credit card bill is $300 per month but you’re in a position where you can only afford $100 per month. If you’re armed with that information as you head into the negotiating process, you’ll be in a better position to get your debt problem resolved.

Also, don’t forget about your savings. If you’ve got some money stashed away, you might have to part with it to keep your creditors happy. That will help increase your credit score. Sure, if that money is earning you a return in line with Citibank CD rates, then you’ll have to make a sacrifice, but in the long run it could be worth it.

4. Talk to Your Creditors, Not Collectors

You don’t want to deal with a collection company. Why? Because that’s a middleman and a middleman rarely has the power to negotiate.

Instead, talk directly to your creditors on the phone. Feel free to ignore the collection agencies that call you non-stop. They aren’t your friends and they probably can’t help you.

5. Get Everything in Writing

When you’ve finally struck a deal with a creditor, a virtual handshake over the phone simply isn’t enough. Get the specifics of the deal in writing so that you have some evidence in the event that legal action is taken.

It’s not easy when you’re in a tough spot and can’t pay bills. Fortunately, you can negotiate with some of your creditors and stay out of long-term trouble.