Negotiating debts isn’t easy, which is why many people tend to shy away from the process. However, negotiating with your creditors can be the difference between being stuck under a giant debt load and possibly being forced into bankruptcy, or finding financial freedom from those debts. While the process may not be easy, it is possible with a little preparation and knowledge.
What You Need To Know
First and foremost, you will be told “No” at least once during your negotiations. Creditors loaned you money and they intend to get it back. While repaying your debts is your responsibility there are situations in which financial hardship strikes, but receiving help from a creditor is a gift and not a right.
Remember that credit negotiations is a back and forth communication that will require you to disclose information about your income and debts. You should be prepared to prove your financial hardship by sending copies of paycheck stubs, writing a personal letter regarding your situation and maybe even documents of events that preceded your financial hardship like a divorce or medical illness.
Even though creditors are owed their money, they do understand that they could be at risk of losing that money altogether in the event you file for bankruptcy. While threats of bankruptcy are not advised, you do have some leverage in your negotiations when keeping in mind that proving your intentions to pay some amount will go far. Know what you can afford and set it up on an automatic payment system. Creditors are often more willing if they know they have a guaranteed payment each month and will not have to wait on a check to be mailed.