How Can I Negotiate My Debt with Creditors?

Getting behind on bills can happen to anyone. It only takes one financial setback, such as a car accident, job loss, or illness, to throw your finances into upheaval. Once this starts, however, things can quickly get out of hand and you may find yourself buried under a pile of bills that you just cannot pay.

While bankruptcy is an option, there are many steps before you may want to consider it. For instance, did you know that many creditors will work with you regarding your outstanding debt? They want to get paid and they will often work with you on not only negotiating a payment plan, but on the amount of the outstanding debt.

How Can I Negotiate My Debt with Creditors?

Working with creditors to negotiate a reduction in the overall amount you owe them is a big step in getting a handle on your debt situation. First, it is always better to call your creditor to try and negotiate the debt before they send it to a collection agency. This will avoid a big impact on your creditor score. Also, debt collectors buy debts for pennies on the dollar. This means that the creditor will likely be amenable to reach a settlement with you. Even if you pay slightly more than a collection agency would to buy the debt, it is still better for them.

Before you attempt to negotiate your debt with creditors, read and save all mail and correspondence related to the debt. Review your income and expenses and know what you can reasonably offer the creditor in order to settle your debt. Be prepared to take notes when you speak with the creditor. This means writing down the name of the person you spoke with and what was discussed. If you reach an agreement with your creditor regarding your payment, be sure to get it in writing.

When negotiating your debt with a creditor, mentioning the possibility or likelihood of filing bankruptcy in the near future can be an effective way to open up the creditor to reduce your debt. In Chapter 7 bankruptcy filings, unsecured creditors usually get nothing. This is also the case in most Chapter 13 filings. Your unsecured creditors, such as credit card companies, are aware of this and will be more than willing to accept what they can get from you in the face of getting nothing should bankruptcy occur.

Negotiating your debts will largely depend on what type of debt you are trying to negotiate. For instance, many people struggle with mortgage payments. A mortgage payment can easily be one of your biggest monthly expenses. Do not wait for foreclosure to be inevitable. You can call your mortgage servicing company and inquire regarding your modification options.

You may also be one of the many Americans struggling with student loan payments. Unfortunately, student loan debt is almost impossible to negotiate. Student loan debt is very rarely dischargeable in bankruptcy which gives the creditor little incentive to work with debtors. There are, however, many options for refinancing student loans, government programs that will allow you to reduce your monthly payment obligation, and even programs to eventually have your outstanding loan balances forgiven.

Wisconsin Debt Negotiating Attorneys

A financial situation can quickly go from bad to worse. Do not wait to lose total control over the situation. Hanson & Payne, LLC will work with you and your creditors to help you through your financial troubles. Let us help you move towards a brighter financial future. Contact us today.