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One option I mentioned last week when talking about how to avoid bankruptcy, was you may need to know how to negotiate with creditors. As your debt is piling up, you have to find a stopping point at which you can reverse the problem. Sometimes that means sitting down with pen and paper and a telephone to go the old fashioned route of calling the people you owe and figuring out a solution with them.
How To Negotiate With Creditors:
Be brutally honest. When you call a creditor to attempt a negotiation you have to be honest. No lying to say you might be able to come up with more money next month. Make it very clear where you are currently financially, and that improvement may take time. Tell them what you can do, instead of focusing on what you can’t do.
Being honest with a creditor is what they need. They need to know what to expect. Don’t promise on something you know you can’t deliver.
Make it a win-win situation. Being willing to compromise (if your budget allows), can create a better chance for negotiations. Approaching a creditor and working with them to create a new payment amount, lower interest rates or even settle an account for a percentage of what is owed can all be great ways to get out of debt and avoid bankruptcy, foreclosure or repossession. The creditor gets some money and you
Be prepared with honest numbers. Seriously look at what you can afford to do. If that is only $25 a month, tell your creditor that. Take the time to prep before you call by looking at your account history. Look at the total balance, current and past interest rates, how old the account is, and then look at your finances. While you always want to offer more payment, go with the lower amount you are certain of. You can always pay more than promised.