Pages Menu
Categories Menu

Posted in Personal Finance

Can Negotiating With Creditors Really Help You Get Out of Debt?

Can Negotiating With Creditors Really Help You Get Out of Debt?

In today’s tough economy, it’s not uncommon to hear about different strategies that will help people get out of debt. With record numbers of home foreclosures and increasing credit card balances, many are willing to try any solution – regardless of how unrealistic they may seem.

Yet, the truth is, if you want to get out of debt, one of the best ways of doing so is first acknowledging the debt itself, and then moving forward with confronting your creditors to come up with a solution that will work for all involved.

No matter how much debt you have – or how it was initiated – the absolute worst thing you can do is ignore it. It won’t just disappear – and in fact, oftentimes, balances can begin to snowball out of control. This will only make things worse on your credit report, credit score, and overall financial situation.

Making a Plan to Get Out of Debt

While being in debt may seem overwhelming, the good news is that you do have options for reducing or even completely eliminating your credit balances. But the first step in the process should be to come up with a realistic plan.

Having such a plan will not only allow you to more clearly see a potential step-by-step solution, but will also show your creditors that you have thoroughly thought through your debt situation and are ready to make positive steps forward in resolving it.

Considerations Prior to Contacting Your Creditors

Once you have come up with a plan, there are several things that you must keep in mind prior to actually contacting your creditors. These include:

  • Knowing that your creditors will not likely agree to the very first solution that you propose – and they may not even appear willing to negotiate.
  • Remembering not to back down or give up – even if it takes several tries.
  • Keeping in mind that if your potential negotiations come to an impasse, you may contact an attorney who could help you to come up with a solution.
  • Not jumping at the first offer that your creditors make. For example, if you only have $5,000 to settle your account, do not agree to an $8,000 settlement, as it would only put you back in a negative financial situation.
  • Not being afraid to walk away from the negotiations if you feel pressured to accept an unrealistic solution or if the negotiations are not moving in the right direction.

In addition, it is always a good idea to know your financial status inside and out. This way, your creditors will not be able to “stump” you on various financial issues. Likewise, you should have a definitive idea of exactly how much you will be able to pay each month on a settlement – so do not let your creditors talk you into paying more.

Although your creditors may not initially be willing to work with you, being persistent can certainly help your odds of success. It is also suggested that you remain firm, yet polite when speaking with representatives from your creditors.

Likewise, you should also stand strong against taking any rude or inappropriate language from your creditors’ representatives. This is not only unprofessional, but also goes against your rights as a debtor.

Keeping Negotiations with Your Creditors on Track

In order to ensure that your negotiations are staying on track – and that all parties involved are “on the same page,” be sure that you take good notes throughout your conversations. These should include dates and times of your phone calls, the name of the representative that you are speaking with, and any other pertinent details.

You should also keep any and all documentation that you receive from your creditors. This will help you to keep track of balances that are due, interest rates that are being charged, and any fees or other charges that have been rendered by your creditors.

After a Solution Has Been Negotiated

If you and your creditors are moving in the right direction and a settlement has been reached, be sure to get everything in writing. This written documentation should include the terms of your settlement agreement as well as the date and time that your negotiations with your creditor has been sealed.

Once you receive the physical documents from your creditors, you should keep a copy for your own personal records and then mail an identical copy to your creditor via certified mail. This “proof of delivery” will help to ensure that the document has been received by your creditor on a specific date. At that time, it will be safe to begin making payments on your debt settlement – and you will be on your way to getting out of debt.