When it comes to resolving debt, debt negotiations can be quite effective for many people. However, the process can be time consuming and does require additional effort. The key in any negotiation is preparation and planning, which also includes knowing what your lender needs to see and hear to be convinced to help.
Getting It On Paper
Most people enter debt negotiations straight from the gate without any organized plan. Although contacting your lender at the first sign of trouble is a good strategy, it doesn’t necessarily mean you should call them up and beg. In fact, sending a detailed letter regarding your financial hardship before you call them on the phone can work wonders. Lenders need to know that you are experiencing a legitimate financial hardship, one that you cannot avoid and have little control in. They also want to know what your plans are for resolving your debts.
First, your letter should describe how your financial situation came to be such as job loss, divorce, medical illness or other. You don’t have to get too personal, but an explanation is helpful.
Your letter should also include a statement of debt responsibility as well as intent to repay. It is important to convey your desire to repay your debt before asking for help.
Last, give your lender an idea of how they can help you resolve your debts. Do you want a lower payment? Do you need a temporary suspension in payments? Presenting your lender with options can help reduce their effort load and increase the chances that they can offer you a solution you can afford.