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How to Handle and Negotiate with Creditors

A lot of people who have high levels of debt tend to avoid calls with creditors. They’d rather not hear from them and, sometimes, they eve refuse to pick up the phone when creditors call. This is a natural reaction, but it might not be the best option. Speaking with your creditors doesn’t necessarily have to be a bad thing. In fact, talking with your creditors can actually be beneficial. This is because, in some cases, creditors will be willing to negotiate.

Here are some ways that you can speak with your creditors and potentially improve your financial standing and make it easier to repay your debt.

Be Prepared

If you are going to call up a creditor and request that they modify your payment terms or ask them to reduce the interest you are paying, you’ll have to be prepared. Look at your statements and determine exactly how much you owe. Know the interest rate that you are being charged. Go through your budget and determine how much you can afford to pay. The more information you have and the more prepared you are, the more seriously your creditors will take your situation.

Plus, when you have more information in front of you, it will be easier for you to determine if what a creditor is offering you is a good deal or not.

It’s also important to know what you want. If you’re looking for a lower monthly payment, a decrease in interest, or more time to repay your loan, make sure you clearly know what you’re hoping for. This won’t just help you stay focused, but it will also make it easier for you to determine if your call was successful.

Be Calm

Having debt is an emotional situation. When you’re overleveraged and responsible for paying more than you can afford, it’s stressful and upsetting. That’s understandable. But, when you speak with your creditors, it’s important to stay calm. No matter what the person on the other end of the phone says or doesn’t say, avoid getting angry or upset. Being calm and polite will help you get what you want. Remember, there’s a human being on the phone with you and human beings react better to calm and polite requests than they do to anger or confusion.

Be Honest and Straightforward

You don’t need to tell an elaborate story or invent a bunch of reasons for why you are unable to make your debt payments. Not only are creditors not particularly interested in hearing long stories, but if the person on the phone starts to think you’re making up parts of your story, they’ll be a lot less likely to want to negotiate with you. Stick to basic facts and don’t overdo it.

If you were ill and couldn’t work, so you can’t pay your bill (for instance), that’s all you have to say. You don’t need to explain what the illness was or why you couldn’t work. Simply say “I was very ill for several months and I couldn’t work, so I’m having trouble making my monthly payments.”

If the interest rate you’re paying is very high and you’re hoping to have it reduced, just say “I’m currently paying [x]% interest on my debt and that makes my payments very difficult to afford. I was hoping to have this interest rate lowered.”

By having a simple and straightforward request, you’re giving the creditor something they can agree to without having to deal with a lot of drama.

Take Notes

Write down details of the conversation, including the time and date, the name of the person you are speaking with, what was discussed, and any resolutions you came to. This will help you keep the situation straight and easy to recall in the future.

Get It in Writing

If your creditor agrees to reduce the amount of interest you’re paying or extend the payment period so that you will pay less each month, ask that they send you updated terms in writing. This gives you proof should anyone dispute the new terms or try to go back on them.

Many creditors will be wiling to modify payment terms or interest rates if you outline a strong case for them to do so. This is because they would rather get some money from you than have you default on the loan or file for bankruptcy. In many cases, all you have to do is ask.