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Six Tips That Will Improve Your Debt Settlement Technique

By Michael Redbourn

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Published: 26Jun2009
Word count: 707
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It's not difficult to carry out debt settlement negotiations yourself, but it's quite often best to have a third party do it for you, and the best credit counseling agencies will often do it for you for a very low price.

There are of course lots of good, and even excellent debt settlement services around, but there are sadly many terrible ones too, and if you pick the wrong one you'll not only pay a lot of money, but it might worsen rather than improve your situation.

If you've already decided that the debt settlement route is the way to go, then I'd recommend either going with a BBB (Better Business Bureau) affiliated credit counseling agency, or doing it yourself.

The biggest problem that most people face when carrying out the negotiations themselves, is their mindset, and they often don't understand that what's good for them, is often not what's good for the creditor.

Below Are 6 Pointers That Should Help You Negotiate With Creditors.

1) If you believe that you can bully a creditor into lowering his interest rate and removing legitimate fees then you're wrong.

In spite of what you might have heard or read, lenders aren't obligated to help you, and the best way to approach them is in with a gentle, confident, and straightforward approach.

Do your best to create as positive an impression as you can, because it will bring about the best environment for negotiations.

2) Do your homework before you make a call to a creditor.

Try to see the negotiation from the creditor's point of view, and write down all the questions that he's likely to ask, and then think about all the possible replies. The worst thing that you want to happen during the call is that you become flustered or frustrated, and appear to be groping for answers. You need to be able to counter any negative suggestion that the lender suggests, but in a constructive and helpful way, and if you can offer creative suggestions that will leave the door open for further negotiations, then so much the better.

3) Don't expect the lender to be particularly sympathetic about your situation.

You got yourself into your present situation, and what you're wanting to do will cost him money, and maybe a lot of it. Try to remember that the person on the other end of the phone has heard a zillion sob stories already, and that if you launch into yours he'll probably roll his eyes and mentally disconnect. Stick to the facts and offer something tangible, something that makes business sense and will convince the lender that by helping you, he'll be helping himself.

4) Try to negotiate as near as possible to the end of the lender's fiscal month.

A fiscal month usually contains full seven day weeks, and probably the most common system used by companies is the 4-4-5 calendar. This means that the first two months of a quarter have four weeks and the last month has five weeks.

The reason for wanting to negotiate as near to the end of the month as possible is that most creditors much prefer to resolve outstanding issues before the first day of their fiscal month. It's something which enables them to keep their bill processing clean throughout their bill consolidation process.

5) Don't rush to play the bankruptcy card.

Of course it might force the lender into making concessions, but it will also totally change the mood from one of negotiation, to one of confrontation.

If the lender tells you to go ahead and file for Chapter 7, then you've most likely lost all chances of future negotiation with him.

Bankruptcy might of course be your best answer, but it will also destroy your credit rating for around seven years, and you should only consider it as a last resort.

6) Before threatening bankruptcy, it might be a whole lot better to remind the lender that the whole bureaucratic process of debt recovery is both time consuming and expensive, and mention that it most often leads to debt negotiation.

Tell him that you're more than ready to compromise right now, and ask him to please reconsider. Suggest that perhaps it would be better to reach an arrangement sooner, rather than later.

The author of this article was a film producer, and award winning film sound editor for many years. He has a passion and a flare for economics, and one of his websites -> Pay Off Debts features the famous Get Free In Three system which has helped a huge number of people get out from under suffocating debts.

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