Top 6 Tips on Debt negotiation

An article in The Market Oracle states, During the first quarter of 2010, the total number of debts that are at least three months past due increased for the 16th consecutive quarter. At present, many Americans are defaulting on their loan repayment which has led to the shredding up of the balance sheets of small and medium sized banks all over the US. Thus, continued recession and the problem of loans have adversely affected the economy. A customer must understand his duty of being a responsible citizen and must make an effort to repay his loans. For those caught up in a debt trap, a good option would be debt negotiation.

Debt Negotiation Tips

Instead of totally refusing to pay the debt, a customer can negotiate with his creditors and at least pay some amount, if not all. Debt negotiation thus, enables a customer to reach a settlement with the bank to pay less as compared to what they actually owe. Below are some of the tips that can be taken into consideration at the time of settling debts:

1. Negotiate first for the accounts having lower balance


It is easier for the creditors to absolve debts involving lesser amounts. Customers must therefore negotiate and first settle the accounts with lower balance and then go on to the higher ones.


2. Settle for 'Pay for delete' or 'Pay in Full' status


The creditors report to the credit bureau about the account status of the customers with whom they have settled down to accept less than the actual amount. Many a times, the reflection of settled or paid as agreed on the credit report will have a negative impact on the customer. In order to avoid this, the customer must negotiate for Pay for delete" agreement so as to remove the entire account detail from the credit report.


3. Create a budge.


At the time of debt negotiation, a customer needs to create a budget to inform the creditors about their financial position. This will help the creditors understand how much can they actually pay.


4. Know how much you can afford


At the time of debt negotiation, customers must make a feasible offer of settlement, that is, an amount that can be easily paid.


5. Show determination to pay off


While negotiating with the creditors, it is important for the clients to make them believe that they are determined to pay off the debt and bring their finances back in position.


6. Let the creditors know about their gains.

At the time of debt negotiation, a customer must explain to the creditors about the benefits of settling their debts. They can make them understand that settling the debt will save their money as the creditors will not have to make any payments to the collection agency or need not go through the hassle of going to the court to sue their clients.

Many a times, the first attempt of debt negotiation is not successful. In such a situation, clients must make another attempt after a month or so in order to reach the settlement.