Negotiating Debt: A DIY Guide |
By Kari Johnson on March 16, 2011
.jpg.aspx?width=75&height=75) If you are in debt over your head, you may be thinking about trying to reach a settlement. While you could employ a professional from a for-profit agency or a nonprofit organization, negotiating your debt is something you can do.
Beforehand, look at what you owe. Look at your income and your budget. Based on these, figure out what you can afford to pay the people you owe money to. Do not over extend yourself. One of the major reasons people have more problems while attempting to eliminate their debt is that they do not leave any emergency funds for incidentals. Also be sure that you have prioritized your debts and are dealing with the one that has been causing you the most trouble, or will in the future.
Once you have decided what you can pay your creditors, whether monthly or in one lump sum, call them. They will not respond to letters. The first person you will get in touch with will be a customer service representative who will not have the power to change what you owe. Ask to speak with someone who deals in debt settlement.
After you have reached that person, be very frank with them. Tell them you want to pay them back and what you can afford and have planned to do, but telling them your personal story is not going to help. Though offering less than you can afford might by giving you room to haggle. Ask what you can do about paying them, but do not agree to pay more than you can afford to. While they would prefer to receive the full amount you owe them, they can generally benefit from debt negotiations too. Settling with you is generally a less costly option than employing collection agencies or settling with the government if you end up filing for bankruptcy.
You may have to call repeatedly to see results. Keep trying. Record your attempts in some sort of log book, including the name of the person you spoke to, their position and employee number if applicable, the date and time, and a short summary of what was discussed during the call. If there are any problems in the future, you will have a written record of your attempt to negotiate with the creditors.
Once you have reached a settlement, do not pay anything until you have the agreement in writing. Furthermore, if your negotiation plan involves monthly payments, do not let them take automatic deductions from your bank account. In fact, do not give them that sort of personal financial information period.
Negotiating debt takes some effort, time, and firmness, but if done correctly, it may help you with your financial problems. If you do not feel comfortable negotiating it yourself, try to find a nonprofit organization to help you. Paying someone to negotiate your debt for you when you could do it yourself should be thought through before employing someone. |
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