Discussing your debts with creditors can be stressful. While some may offer a stubborn façade, the truth is many are more willing to negotiate than they originally let on. The key is knowing how to enter credit negotiations the right way. Before you begin debt negotiations, make sure you are prepared to do the following:
Outline your budget—you need to know how much you can afford to pay before you negotiate. Evaluate your finances and determine what you can realistically pay each month. No your bottom line before you open up discussion, but be somewhat flexible in negotiations.
Prioritize your payments –not all debts are the same. Look at all of your debt accounts and determine which one is the highest priority. This may be a secured debt, one that has a time limit for repayment or one with the highest interest rate.
Make contact before you default—don’t wait until you are past due before negotiating. Contact your creditor at the first sign of financial trouble. This maintains a positive relationship with your creditor and boosts your chances at successful negotiations.
Get it in writing—be sure to get a copy of your debt negotiation deal in writing from the creditor. Keep this information as proof of your approved plan. In the event credit collectors get involved or credit damage results, you will need this information as proof of your agreement.
Follow through—you must keep up your end of the arrangement after a debt negotiation. The worst thing you can do is to arrange modifications to your account and then default. This can result in the nullification of the deal and steep penalty fees.