Negotiating your debt can be an unnerving experience. Whatever you do, always remember to be prepared. Know what type of debt can be negotiated first. Your credit cards, medical bills, and other unsecured loans are eligible for negotiation. Get this debt together, and decide on an amount you are able to pay back. If you know what you owe and what you are able to pay, you will not be desperate to take the first amount offered. (And, believe me, you never want to take the first offer.)
If you can find a non-profit organization, you should consider telling them your story and have them negotiate with your lenders. A smaller non-profit organization is not doing business to make a lot of money, and they are much more interpersonal when it comes to communication.
It is much better to do it in person, but if you are negotiating over the phone, use a tape recorder. You need a record of what’s being said, and this is your best option to keep track of the negotiation. Most states allow you to record without permission, and the rest of the states allow it with permission. Either way, recording your phone call is allowed, so I strongly suggest doing this.
Be honest. Don’t tell your entire life story, though. Explain why you haven’t been able to pay your debt, whether you’ve been injured, laid off from work, or going through a divorce. Also make it clear that you can only pay a certain amount of money. If you are forced to pay more than you can afford, you might default on secured loans, and then you’ll be in more trouble. Your lenders don’t want to see you go bankrupt because they’ll lose much more money that way. They would rather get some percentage of your balance than none at all.
If dealing directly with your lenders, be prudent in any personal information you reveal. Never give any information about your banking account. Lenders may take this information and force automatic electronic payments, draining your account and leaving you unable to pay your mortgage. (Remember, the importance of your mortgage far outweighs any of your unsecured debts.)
When you come to an appropriate negotiation, ask your debt collector to remove any negative information on your credit report. Remember to ask for “paid in full as agreed,” rather than “paid in settlement.” The collector might ask for an immediate payment. Don’t pay anything until you have the payment plan in writing.
And don’t be dismayed if your creditor doesn’t talk to you the first time. You will have to make multiple calls in order to make the negotiation work. Be persistent, truthful, and prepared, and you will be able to pay what you are able to pay.
He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.
Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.
In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
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