Strategies for debt negotiation place the power in people's hand, not the creditors. Typically, people have two options when seeking to eliminate their debt. Some people choose to seek help from debt negotiation firms or take control of their finances by contacting creditors. The key to negotiation strategies is remembering that creditors are not people's friends and are interested in obtaining the best settlement deal for companies not debtors.
Debt negotiations may feel overwhelming because people may not know the negotiation or credit terminology. However, don't worry. More importantly, don't panic. Creditors want people to panic. When they do, they often accept unfavorable repayment agreements instead continuing settlement negotiations. So, people should research terminology such as secured debt verses unsecured debt, but never panic.
People close accounts thinking that they are helping to eliminate their debts. After all, if the accounts are closed they can't use them and may stop occurring late charges and interest charges. This is a terrible debt negotiation strategy. In fact, canceling credit places people at a disadvantage when trying to negotiate settlements. According to Legal Helpers, the strategy places the negotiation leverage in creditors' hands. They don't have an incentive to negotiate debt settlements because people are no longer customers.
Often people will tell creditors about their goal of repaying their debt because they want to clean up their credit, buy homes or better employment. Information like that places the negotiation power in creditors' hands. If creditors know people are eager to eliminate the debt, then they'll be eager to request higher repayment amounts because they know people want something out of it. Also, people shouldn't disclose information about where they bank or work. According to Oak View Law Group, it's a mistake to disclose personal information. Creditors may use the information later to garnish wages or contact people on the job.
It's a given. Creditors always want people to repay more money than they can. Typically, people know how much money they can repay without adding more financial stress. So, it's best to set a limit settlement amounts and stick to them. For instance, if people know they can make a monthly payment of $75 dollars, they shouldn't agree to pay $150 a month. They place themselves at the risk of missing payments and causing more debt such as late fees.