Although there are many different types of debts, not all are equally negotiable. Some debts are easily negotiated with creditors, while others may be more difficult or denied completely. Before entering debt negotiations, it is important to know which debts are the most commonly negotiated debts.
Credit Card Debt
The most common source of debt among Americans is credit card debt. Luckily, these debts are also fairly easy to negotiate with creditors. However, the responsibility of providing proof for the need to lower debts falls on the debtor. Most creditors want to see that the debtor is experiencing financial trouble, but also that they can afford to make payments on modified terms.
Student Loan Debt
The fastest growing sources of debt among Americans under the age of 30 is student loan debt. These debts are more difficult to manage and are generally not eligible for discharge in bankruptcy. However, most student loan debts can be negotiated directly with the lender. Debtors can request a deferment, in which payments are temporarily suspended for a specified period of time. Deferments are given out for reasons such as career changes, temporary medical illnesses, birth of a child or the start up of a new business. A forbearance or settlement agreement may be negotiated for those experiencing more severe financial hardships.
Although most tax debts are not eligible for bankruptcy, they can be directly negotiated with the IRS. The IRS offers several ways in which tax debts can be repaid. An installment plan agreement is reserved for those who can afford to repay their debts over a period of one to two years. An Offer In Compromise is a type of tax debt settlement, in which the IRS agrees to accept less than the actual tax debt owed.