My Personal Finance Blog

ot difficult to carry out debt settlement negotiations yourself, but it’s quite often best to have a third party do it for you, and the best credit counseling agencies will often do it for you for a very low price.

There are lots of good, and even excellent debt settlement companies of course, but there are also a great number of bad, to very bad ones, and if you end up with one of those, you’ll not only spend a lot of money, but you might get next to nothing in return.

If you’ve already decided that the debt settlement route is the way to go, then I’d recommend either going with a BBB (Better Business Bureau) affiliated credit counseling agency, or doing it yourself.

The biggest problem that most people face when carrying out the negotiations themselves, is their mindset, and they often don’t understand that what’s good for them, is often not what’s good for the creditor.

Below Are 6 Pointers That Should Help You Negotiate With Creditors.

1) If you believe that you can bully a lender into lowering his interest rate and eliminating legitimate fees then you’re mistaken.

In spite of what you might have heard or read, lenders aren’t obligated to help you, and the best way to approach them is in with a gentle, confident, and straightforward approach.

Do your best to create as positive an impression as you can, because it will bring about the best environment for negotiations.

2) Do your homework before you make a call to a creditor.

Try to see the negotiation from the creditor’s point of view, and write down all the questions that he’s likely to ask, and then think about all the possible replies. The very last thing that you want to occur during the call is that you become confused or frustrated, and appear to be searching for answers. You need to be able to counter any negative suggestion that the lender suggests, but in a constructive and helpful way, and if you can offer creative suggestions that will leave the door open for further negotiations, then so much the better.

3) Don’t expect the lender to be particularly sympathetic about your situation.

You got yourself into your present situation, and what you’re wanting to do will cost him money, and maybe a lot of it. Bear in mind that the person that your talking on the phone to has already heard every sob story in the book, and launching into yours will most likely just cause him to roll his eyes, and mentally disconnect. Try to offer something tangible that makes good business sense. Stick to the facts, and try to convince the lender that by helping you, that he’ll also be helping himself.

4) Try to negotiate as near as possible to the end of the lender’s fiscal month.

A fiscal month usually contains full seven day weeks, and probably the most common system used by companies is the 4-4-5 calendar. This means that the first two months of a quarter have four weeks and the last month has five weeks.

The reason for wanting to negotiate as near to the end of the month as possible is that most creditors much prefer to resolve outstanding issues before the first day of their fiscal month. It’s something which enables them to keep their bill processing clean throughout their bill consolidation process.

5) Don’t rush to play the bankruptcy card.

It might well force the creditor into making concessions, but it will also completely change the atmosphere from one of cooperation, to one of confrontation.

If the lender tells you to go ahead and file for Chapter 7, then you’ve most likely lost all chances of future negotiation with him.

In some cases, bankruptcy might be your best course of action, but it will also ruin your credit rating for seven years, and you should only resort to it if you have no other options.

6) Before threatening bankruptcy, it might be a whole lot better to remind the lender that the whole bureaucratic process of debt recovery is both time consuming and expensive, and mention that it most often leads to debt negotiation.

Tell him that you’re more than ready to compromise right now, and ask him to please reconsider. Suggest that perhaps it would be better to reach an arrangement sooner, rather than later.

The author of this article was a film producer, and award winning film sound editor for many years. One of his primary interests is economics, and one of his websites -> Get Financial Help is for people with bad credit that need a loan. The cost of an extended list of lenders is extremely small, and anyone not getting a loan within 60 days gets a full refund.