The Strategy Of Negotiating Debt

How You Present Your Financial Situation

Obviously, the more money the creditor thinks you have, then the more he will hold out for. Explain that you want to buy a new car and need this blemish removed from your credit history so that you can get approval for a loan and you will insure that a settlement will be strictly on the creditor’s terms.

On the other hand, if the creditor gets the impression that you have very little money and you are teetering on the edge of bankruptcy, then he will be less demanding. This is where an attorney can be most helpful as explained a little later.

We have helped many families with medical bills. Hard to swallow, but true. Go to the business office of the clinic or hospital and ask to discuss your bill. Make sure that you bring copies of your paycheck, rent receipts, utility bills and any information that proves how much you earn and how much you spend. These folks know that “you cannot make soup from a stone”. So, after reviewing your financial situation they almost always come up with a payment plan. IF, you do not respond and do not want to talk about your bill, you can rest assured that it WILL be turned over to a collection agency and possibly legal action.

How You Present Your Terms

There are three approaches you can take in notifying the creditor of your full intentions, pre-notification, post-notification and incremental notification. If money is not a huge factor, and you want to get things done as quickly as possible, pre-notification of terms will help you do that.

Just like it sounds, pre-notification means you tell the creditor up front that you will require the deletion of the entire negative listing as a part of the payoff. A written agreement to delete the listing and consider the debt settled must be signed before you make the payoff.

The advantage of this approach is speedy results. You won’t drag things out only to be disappointed in the end when a creditor won’t remove a negative comment.
The drawback to this approach is that you will be asked to pay a higher settlement, because you have just said in effect “My credit is very important to me.” And they will make you pay to get it back, perhaps even 100% of the amount you owe.

The other extreme is post-notification of terms. Post-notification is where you reach an agreed settlement for the outstanding balance, but you don’t mention your terms regarding how the item will be reported until you actually send payment.

How You Utilize Your Resources And Leverage Opportunities

You should have a clear idea of what you want to accomplish before you start negotiating. Always do it in writing. A telephone call just doesn’t work. When you negotiate in writing everyone has a record. Your two priorities are:

· Negotiate negative credit information off your file.

· Negotiate a settlement.

Additionally, you should also determine what you’re going to shoot for as far as status (how comments on your credit record will be worded); and, the minimum you are willing to agree to.

In other words, decide what concession you’re going after and the maximum you’re willing to give to gain that concession-and what you’re willing to give to gain a lesser concession if you cannot reach an agreement on your first choice.

A major determining factor with any negotiating strategies is financial resources. Unfortunately, most people do not have the cash to settle a lot of large accounts at one time. This means they must use more creative means to stretch their resources. One such method is to use a debt settlement schedule. A debt settlement schedule takes the amount agreed to as a full settlement and breaks it up into installments.

The purpose of the schedule is to have negative information removed from your report as soon as you begin repayment. A creditor is most inclined to accept such a payment arrangement if he perceives that you are a candidate for filing bankruptcy.

In Chapter 13 (wage earner plan), the court may structure up to a 60-month repayment. If you propose repayment over 12 to 24 months, your creditor may see that as much more attractive an offer. In all cases, discuss your options with an Attorney and then make your own choice.

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