There’s the fun kind of haggling, like getting a great vintage piece at a flea market for less than the price on the tag. Then there’s the stressful kind of negotiating, like going back and forth with car salespeople over how much you’ll need to hand over to drive away with a new set of wheels.
You can probably guess which end of the spectrum negotiating with creditors tends to fall on — it’s a task many people put off, or even don’t realize is a viable option for trying to reduce debt.
Not only do you have a higher likelihood of getting the results you want if you go in with a plan, you’ll also feel less daunted during the process. Before you pick up the phone and dial your creditors, remember these four things.
- Creditors Want to Get Something
Think about the position creditors are in when it comes to defaulted debt. They’re at risk of getting nothing if consumers either continue nonpayment or file for bankruptcy. Always remember it’s in creditors’ best interest to get something. Otherwise they’ll have to write off the entire debt, something that can be a significant loss for them. And collection agencies that have bought your default debt from the original creditor also have an interest in recouping at least the amount they paid for it.
The outcome can be a win-win for everyone involved. What’s worse is if you keep avoiding your debt and creditors never see a penny of it. There’s mutual interest in reaching an agreement.
- Start Low, Then Meet in the Middle
Nolo recommends starting with a very low offer, around 15 percent. While it’s unlikely your creditor will accept right away, this maximizes the chances you’ll be able to settle for around 30 to 50 percent of the original balance. If you start too high, you’ll just end up on the hook for a higher repayment.
It’s also useful to let creditors know you’re prepared to pay a smaller percentage as soon as possible — this is even more effective if you’re prepared to hand over a significant amount of cash pending a negotiation that goes in your favor. Timeliness is your ally in this situation.
- Professional Negotiators Can Do This Work for You
Some consumers carrying thousands in debt choose to enroll in a debt settlement program. While you will pay a fee for any successful settlements you achieve, this strategy does allow enrollees to leave negotiations up to a professional team — one that has prior experience negotiating with certain creditors.
Many enrollees who end up achieving settlements have expressed in Freedom Debt Relief reviews, for instance, that they had trouble getting a handle on their debt through do-it-yourself strategies before finding better outcomes working with a team of trained professionals to save up, negotiate and settle.
The moral of the story is that if negotiating on your own with creditors seems like a hurdle, there are other options — debt settlement being one such route that’ll give you access to a team of professional negotiators.
- Understand Any Agreements before You Sign
It can be an adrenaline rush to find out a creditor has agreed to settle following negotiations. Just make sure you fully, 100 percent understand the arrangement before you sign on the dotted line. Get it in writing, and consider involving an attorney whenever possible.
You ultimately want to avoid a situation in which you agree to one thing, then come to find out an important detail slipped through the cracks, or that your creditor had a different idea of the amount you owe or timeline for repayment.
Negotiating with creditors can help you get a more favorable settlement than paying your debt in full, whether you choose to go it alone or work with a debt relief organization.
