Can You Negotiate With Your Creditors

Can You Negotiate With Your Creditors Can You Negotiate With Your Creditors? Can You Negotiate With Your Creditors?Yes, you can negotiate with your creditors, but make sure you do your homework first.We’ve all got bills we have to pay. And sometimes we don’t have all the money we need to pay them. So what’s the solution?Well, if you have good credit, you can get a personal loan at reasonable rates. If you don’t have good credit, you might consider a bad credit loan or a no credit check loan, but those tend to have high interest rates and, if they’re a payday loan, very short payment terms.And besides, taking out another  loan or a credit card cash advance to pay your bills wont really solve your problem. Itll just leave you with another bill you aren’t sure how to pay.Is it worth trying to negotiate with your creditors? And if so, what would be the best way to do so? Read on to find out!The first step is admitting you have a problem.Wouldn’t it be nice if your creditors just … stopped calling about your missing payments? Maybe if you just igno re them for long enough, they’ll forget you exist. Most creditors are goldfish, right?As Jonas Sickler, marketing director for ReputationManagement.com (@repmgmt_com), told us: “Burying your head in the sand will make it worse, not better.”And why is that? Because when your creditors stop calling, it isn’t because they’ve forgotten about your debt. It’s because they’ve turned it over to a debt collector who will start calling you instead.So did anything change? Yep. Your credit did, and not in a good way.“One of the most important debts to negotiate is collections,” says Sickler. “Having debt in collections can do significant damage to your financial reputationâ€"affecting everything from your ability to get a car to a business loan, so its essential to resolve these issues rather than ignore them. Fortunately, you do have some bargaining power at your disposal.”So how do you deal with the people to whom you owe money, collections or otherwise?(Related reading:  What Debt Collectors Can and Can’t Do.)What’s realistic for you?Once you’ve accepted that you’re going to have to deal with these debts, it’s time to figure out what your “dealing with it” budget looks like.Here’s how author, financial educator, and friend of the Financial Sense Blog Gerri Detweiler (@GerriDetweiler) put it for us:“Know what you can afford. This may sound obvious, but many people dont really go into a discussion with a creditor understanding how much they can afford to pay on each debt. Before you make that call, you need to carefully review your spending to figure out the most you can afford to pay and still be able to pay essential bills like rent, utilities, or gas for your car.”Once you have a realistic sense of your financial situation, it’s negotiation time.Know what to expect.Now that you know what your own situation is, it’s time to learn your creditors situation too.First of all, know what they aren’t going to offer you. “Under stand how it works,” advised Detweiler. “If you are able to afford your minimum payment each month then it is unlikely your creditor will reduce your payment as long as you are continuing to pay that amount. In other words, they arent going to let you pay less than you owe unless there is a clear risk that you are going to not pay them at all.”Detweiler also explained that, even if the person you’re talking to wants to help you, they may be limited in their ability to do so: “Creditors tend to be very policy-driven. In other words, they will have their own internal guidelines that cover when and how they can reduce interest rates or payments in hardship situations. Your main goal,  therefore, will be to get them to explain the options available to you.”So you know what your situation is. You know what they can potentially offer you. Now how can you increase your odds of getting that thing or thing?Use your leverage.Creditors are, for the most part, businesspeople, and th at means they don’t want to lose money. They’d rather get some of the money you owe them than none, especially if it means they don’t have to spend money on lawyers.“Creditors want to collect as much as possible,” advised Detweiler. “Youll have the most leverage if you are falling behind on payments. However, that will damage your credit scores. Its a trade-off.“If you are not already falling behind but you think its likely in the future, you may want to talk with a credit counseling agency. If you are already falling behind on payments, then you may want to look into debt settlement or even bankruptcy.“You may have a lot more leverage with a debt collector. Debt collectors often negotiate debts and may be willing to accept less than the full balance. The older the debt, the easier it is to negotiate a smaller payment because they know the likelihood of collecting becomes slimmer as the debt becomes older. Just make sure you first check the statute of limitations on the debt. Agreeing to pay the debt or making a payment of the debt of any size may restart the statute of limitations, allowing them to sue you to collect.”And whatever agreement you are able to reach, there’s something you’ll want to be certain to do:“Never, and I mean never, schedule a single payment without having a written letter of intent,” warned Sickler. “This letter must state the total amount of debt owed, the total payment you are making to the creditor, and a statement certifying that the processing of the payment signifies payment in full for the entire outstanding debt. This is crucial. Not only do you want the debt resolved, but you need your credit report to show it as paid in full.”(Related Reading:  How Do You Contest Errors On Your Credit Report?)What if your creditor stonewalls?Some creditors will simply not be receptive to any negotiation. So what can you do?“Dont be surprised if your creditor doesnt offer a significant relief, even though it make s sense to you that they should do so,” said Detweiler. “Creditors have their own internal policies that they must follow when consumers make these kinds of requests. Dont take it personally. If you cant get your creditor to work with you, consider talking with a credit counseling agency or a bankruptcy attorney.”It’s not a good situation to find yourself in, but if you’re behind on your payments, there are some options. Hopefully, this guide helped you get a sense of what they are. Good luck!To learn more about dealing with debt, check out these related posts and articles from OppLoans:The OppLoans Guide to Consolidating Student Loan DebtWant to Avoid No Credit Check Loans? Build an Emergency FundAre Balance Transfers a Good Way to Pay Down Debt?Have you ever negotiated directly with a creditor? We want to hear about it!  You can  email us  or you can find us on  Facebook  and  Twitter.ContributorsGerri Detweiler (@GerriDetweiler) is the education director for Nav, which helps business owners build business credit for free. She is also the coauthor of a free Kindle ebook:  Debt Collection Answers: How To Use Debt Collection Laws To Protect Your Rights.Jonas Sickler  is responsible for building and executing the digital marketing strategy at  ReputationManagement.com (@repmgmt_com). The broad scope of his role encompasses strategic content creation, web analytics, and developing and deploying targeted digital campaigns from concept to completion.