Six Tips for Negotiating Debt and Dealing with Creditors

September 12, 2014

How to Negotiate Debt

If you are struggling to pay down your debt, chances are, you’ll need to communicate with your creditors at some point.

There are several things that can help make these conversations more effective.

1. Know What You Are Going To Say

Creditors don’t want to hear a long, drawn out story about every financial bump in the road you’ve faced over the last couple of years. They do, however, need to know you are experiencing hardship and that you are actively working to overcome it.

Once you realize routine conversations with your creditors are necessary, decide exactly what you are going to tell them. Don’t lie. Be honest, yet concise.

For example,

  • My son was in the hospital and I had to take several days off work. In addition to a reduction in income, we are also experiencing an extra heavy debt load right now. However, I am looking for a temporary part-time job to help get through this tough time.
  • I was recently laid off. My wife only works part-time. She is hoping to add more hours or get a second job while I hunt for something new.
  • Debt wise, I am in over my head. I am meeting with a foreclosure attorney to discuss my options.

2. Make a Detailed Budget

Before you can start negotiating your debt, you need to know exactly what you are capable of paying.

Carefully go over both your income and expenses as you draft a budget. This will help you determine what sort of repayment plan is possible.

In the long run, a lump-sum payment is preferable. An extended repayment plan means you’ll probably spend more over time. If your budget allows it, a single payment is best.

If a long-term repayment plan is necessary, be sure to check the terms carefully. Don’t sign until you know exactly what you’ll be expected to pay in total.

3. Don’t Avoid the Creditors – IF You Want to Work out a Deal

One of the most common questions I receive is if a consumer is required to take the call when a creditor calls them. The answer is “no.” There is no legal obligation to answer a creditor’s calls. But if you want to negotiate on the debt, then you will have to talk to them eventually.

Sometimes, conversations with creditors can be difficult. Some creditors can be pushy and unprofessional. Take the higher road. Screaming and shouting will not make things better; in fact, it could make things worse. Keep calm. Remember – you are in control. If the conversation gets out of hand, all you have to do is press the “off” button on your phone.

4. Take Notes

You should document every conversation that you have with your credits. Each time you communicate with someone, note the name, date and subject matter. I would also recommend taking down who called who (did they call you or vice versa), and the phone number for both parties. Additionally, most customer service representatives will have some kind of identification number that they will provide you upon request.

Cataloging this information will help you be better organized for future conversations. Also, in the event that the creditor engages in some form of illegal collection activity, it can be very helpful for a court or another third party if they can see contemporaneous notes as evidence of the wrongful conduct.

5. Consider Professional Help

If it seems your debt is unmanageable and negotiations with your creditors are going nowhere, it might be time to contact a bankruptcy lawyer. The Law Office of Michael A. Ziegler, P.L., a Clearwater bankruptcy attorney, offers a free consultation.

Even if bankruptcy doesn’t end up being your best option, it is reassuring to have professional input.

6. Insist on Documentation

If you and your creditors are able to come to an agreement, get it in writing. Without documentation, the creditor can change the terms of the agreement—and you won’t have anything to prove you agreed to something different.

Debt management can be tricky. If you make the wrong decision—or fail to act all together—you can severely damage your credit history and likelihood of future financial stability.

If you are struggling to manage your debt, contact Ziegler Law Office. Fill out the form to the right and we’ll schedule a free consultation to review your situation. Whether you need help with creditor harassment or bankruptcy, we can help you evaluate your options.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.