Tips: How to negotiate with creditors

In a recent blog post, we discussed how individuals can manage their debt when unemployed. One of the first steps involves negotiating a different payment plan with creditors.

There is no doubt that speaking with creditors can be overwhelming. So, here are some tips to help individuals when they call to negotiate with creditors.

Preparation is key when negotiating

It is important to note that creditors want to collect the money owed. Therefore, they are often willing to negotiate.

Even so, it can still be stressful to speak with them. So, it is helpful if individuals:

• Gather information: Individuals should review the Fair Debt Collection Practices Act. This law explains specifically what creditors – and debt collectors – can and cannot do. Having this information on hand can help individuals understand their rights when they speak with creditors to negotiate. It is also helpful to have one’s financial information readily available, such as the name of the creditor and how much they owe. Being prepared with information can help reduce individuals’ stress when they take on this task.
• Calculate a potential repayment plan: It is helpful to assess one’s finances and debt to determine an effective repayment option before speaking with creditors. This shows creditors that individuals are taking responsibility, but also mean business. This makes it less likely that creditors will push back against the plan. Calculating a proper repayment plan can be complex, but an experienced bankruptcy attorney can help individuals create a plan that repays the debts and protects their best interests as well.
• Stay calm: It is illegal for creditors to harass or threaten individuals. However, they can be insistent. This often only adds to the challenge of negotiating with creditors, but individuals should make sure they remain calm and civil when speaking with creditors.

Many debts – such as a mortgage, for example – allow individuals to modify their payments. So, knowing how to negotiate with creditors effectively is critical to help preserve one’s finances and reduce the potential debt.

If individuals face overwhelming debt, they might be considering filing bankruptcy to obtain relief from debt – as well as calls from creditors. However, in addition to bankruptcy, individuals should remember that they often have the option to negotiate their payment options with their creditors when times get tough.