Credit card negotiations are a great way for debtors to lower their monthly payments and find relief from their credit debt. The process can be tricky and dealing with creditors is never easy. Being prepared before you contact the creditor is your biggest negotiation tool. However, many people don’t know what to ask for when they enter negotiations, which could leave them without the result they were hoping to achieve.
Knowing What You Want
If you are experiencing a temporary financial setback and only need short term relief from your credit card bills, you should consider asking for changes to your payment amount or payment schedule. You may be able to negotiate a lower monthly payment or temporary suspension in payments for a short time period. Generally, creditors may be willing to lower your monthly payment or temporarily suspend payments for up to 6 months or a year. These changes are generally done on their end and do not result in any long term changes to your account such as a reduced interest rate or reduction in the principal amount owed.
If your financial hardship is more severe or you expect the hardship to last longer than 6 months to a year, consider requesting a more permanent change to your credit account. Ask your lender to reduce the interest rate associated with your account or a reduction in the principal amount owed on the loan. Changes like these are more difficult to obtain and may require more documentation of your financial hardship. Your creditor may request that you demonstrate your lack of income or reason for your hardship before approving a longer term modification to your account.
If you are in the position to where you know you cannot afford to repay your debts in full at any point, you may want to negotiate a long term payment schedule along with requesting a reduction in the principal amount owed. Negotiations like these are fairly difficult to obtain, but your creditor may be more willing to approve the arrangement if you let them know you would prefer to settle your debts outside of bankruptcy.