How to Negotiate With Your Creditors

Most of us have had to deal with creditors at one point in our life. It's not fun. Immaturity and sometimes circumstances beyond our control can cause us to fall behind on our bills. When the creditors and collection agencies start calling and sending letters, it only adds to the stress. You can't help but feel like you've gotten in over your head. You don't have to drown in debt.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Bills
• Credit report
• Persistence

1. 
   Gather bills

   Gather all of your bills together. Get a copy of your credit report, so you can check for any type of collection activity. Calculate your monthly income and household bills. Determine how much you have to put towards paying off your debts. Once you have all those affairs in order, it's time to contact your creditors.

2. 
   Prioritize

   Decide which bill you need to pay first. Contact the creditor. The most important thing that you must do is, STAY IN CONTROL OF THE CALL! Start low. Creditors will, a lot of times, accept as little as 40% of what you owe.

3. 
   How It Works

   Example.... For the sake of numbers, say you owe $100 to the cell phone company. Tell them the reason you fell behind and that you have not forgotten about your obligations.

4. 

   Tell your creditor that you can pay $25 right now today to clear the debt. They will more than likely tell you they can't accept that and shoot you a higher number. Probably $75, give or take a few dollars.

5. 
   Be Polite!

   Ball is in your court again. Tell them you can give them $40 to settle it today. If they still won't budge, ask to speak with a supervisor, that can make decisions that they may not be able to make. (Always be polite, yet firm). Sometimes this is all it takes...

6. 
   Get It In Writing

   If the supervisor still won't accept your $40 offer, tell them you can pay half ($50),if they will agree to remove it from your credit file. Once you have come up with an agreement, tell them to send a copy of the terms you agreed on, written on an authentic letter head from their company, with an authorized signature.

7. 
   Paid In Full

   Continue this process with each of your creditors until all of your debt is paid off, for the minimum amount possible. Only use this method when you have cash on hand to pay the amount that you have agreed to.

8. 
   Payment Arrangements

   If you can't pay in lump sums, that's okay. There's another solution for these type of situations. You can negotiate a payment plan with your creditor instead.

9. 
   Stay Commited

   Call the collection agency and tell them that you want to work out a payment plan for the amount owed. Be sure to negotiate a term that you are able to commit to.

10. 
    Clear Credit Report

    Ask that the creditor report all payments to the credit agencies and have the entry removed once the debt is paid in full. Again, be sure to GET IT IN WRITING!

Tips & Warnings

• Always get your agreements in writing.
• Don't let the creditors intimidate you with scare tactics.
• Control the call. Speak as if you are doing "them" a favor.
• Always insist that the item be removed from your credit file.
• Never be rude. "You get more bees with honey."
• Don't repeat the same pattern that got you in debt in the first place.

[Delaplane]

on 6/9/2009 Great article!

[fjsmileygirl]

on 4/8/2009 my credit card company said they cannot remove the charge information from the credit bureaus because they sold the account to a collection agency, is that true? if so, can the collection agency remove the charge information if i make the settlement with them?

[Ladybugblue]

on 2/1/2009 Great article & good advice! 5*

[PajamaMommy]

on 1/11/2009 Good tips. I may be using these soon. Thanks. 5*

[sstock1211]

on 1/7/2009 Good tips. Thanks for sharing.