If you’ve cut all your spending to the bone – to the point where you just can’t squeeze another dollar out of your expenses – it might be time to try something else. The something else is called negotiating with your creditors or debt settlement.
Yes, you can
You may not have ever thought about negotiating with your creditors but in the words of that 2008 campaign slogan – yes, you can. In fact, if you’re a really good negotiator you might be able to get your debt cut by 40% or even more. No, not all of your creditors will be willing to negotiate. But if you can get just a few concessions, this can make a big difference in your finances and, ultimately, keep you out of bankruptcy court.
Preparing to negotiate
First, it’s important to understand the very few creditors will be willing to negotiate unless you’re a number of months in arrears. While there is no magic number, you might have to be at least six months in arrears before beginning negotiations. Next, make a detailed list of your debts and put them in order of those you want to negotiate first and what you want to ask from each of your creditors.
List all your debts
The list of debts mentioned in the previous paragraph should include the name of the creditor, what you are supposed to pay each month (your minimum monthly payment), the interest rate you’re paying and the outstanding balance. If you are behind on your payments on any of your debts, he sure to write down the number of months you are in arrears and the total of your past due amounts. Finally, separate your unsecured debts from your secured debts. Credit card debts, personal loans and medical bills are all unsecured debts. Your mortgage and auto loan(s) are secured debts and much harder to negotiate.
Next, zero in on your secured debts and make sure you keep up with them. This is because if you don’t, your lender could take back their collateral, which likely would be your house or car. While you might be able to negotiate on your secured debts, you’ll really want to negotiate on the ones that are unsecured.
Review your household budget so you can determine exactly what you want from each creditor in order to pay off any amounts that are past due and keep up with future payments. This could be lowering the amount of your monthly payments, lowering your interest rates, making interest-only payments for a while or waiving or lowering certain fees. In the event you are at least six months past due, you may want to try to settle for less than the full amount owed. This might surprise you but creditors are sometimes willing to do this if they can the convinced that debt settlement is its best alternative for getting at least “half a loaf,” rather than nothing.
Get it all in writing
If you’re able to negotiate successfully with a creditor, be sure to get all the details in writing. This could be a letter from the creditor spelling out what you’ve agreed to or could be an email. The important thing to get it all in writing.
Let us to the negotiating for you
Truth be told, you have to be a very good negotiator to go against credit card and personal finance companies. You need to never put all your cards on the table, know your bottom line, understand that sometimes you have to give a bit in order to get a little, and recognize that the other party really has the edge in your negotiations.
If this all sounds a bit much, you could let us negotiate debt settlement for you. Our debt counselors have many years of experience negotiating with lenders and usually save our customers thousands of dollars – and help them out of debt 24 to 48 months. Call our toll-free number today for more information.