Financial Accuracy

If you’re drowning in unpaid bills and losing your sleep over unpaid debts, then it is time to conquer your fear and negotiate creditors to reduce your debts.

How to do negotiation

You can negotiate creditors by following the 5 steps mentioned below:

1. Prepare a budget: Based on your monthly income and expenses, you have to prepare a budget. You need to cut down some expenses on some minor things, like, consuming less beer or coke and need to show your creditors that you are eager to pay off your debt, with the extra amount of money you can afford.

2. Talk to your creditors: You need to make a phone call to your creditor and explain to him about your non-affordability to make payments towards the debts. You need to be polite and have to avoid any sort of confrontation. You will get nowhere if you have an aggressive attitude. If you are refused, wait for several days and try again.

3. Offer a lump sum: If you have some extra cash in your hand, you can offer that amount as a lump sum, if the creditor agrees to settle your debt and reduce your outstanding debt amount by 40-60%. If the creditor has authority, you can also request him to remove the negative statements from your credit report, after you and your creditor agree for a debt settlement.

4. Ask for payment plan: If you don’t have a lump sum amount, you can ask your creditor to make a payment plan that will be according to your affordability, until your debt is fully paid off. Be sure to make all the payments by check or by money order, so that you have proof of payment, if any dispute arises in the future.

5. Get written agreement: You should have a written agreement from your creditor about your settlement or payment plan, so that he cannot put pressure on you in the future and ask for more amount of money. Always make sure to keep records of every phone call, notes and correspondence letters with your creditor.

You need to be polite, realistic, specific and flexible while you negotiate with your creditors. You have to convince your creditor that, you have good intention of clearing off your debts and you are ready to compromise. You need to present a win-win situation, so that your creditor also gets satisfaction out of the deal. If you have honesty and persistency, you can pay off your debts in a short time.