Article Directory :: Finance & Investment Articles

Discover The Do's And Don'ts Of Negotiating With Original Creditors

By Michael Redbourn

Republish: EasyPublish™ Published: 05Oct2009 Word count: 833 Viewed: 1166 time(s) Get Free Content For Your Site

There are lots of very good articles that explain how to negotiate with debt collectors, but far less that explain how to negotiate with the Original Creditor, which is something that calls for a very different approach, and is something that if not done correctly, will most likely spoil your chances of making the very best possible deal with them.

Before we discuss the best way to negotiate however, we first need to establish whether or not you are in fact dealing with your original creditor.

Your debt is most likely still being held by the original creditor if,

a) The credit card company is still managing your account

b) You are less than five months in arrears

c) Your credit card accounts have not yet gone out for collection

Of course the simplest way to make sure it to call them, but you must write down who you spoke to, the exact date and time, and what they said, and you will have to note the same things every time you speak to the company from now on.

Whereas you should never call a debt collection company, there is no reason not to call a credit card company, and it's actually a must do thing, or else you'll never be able to make a deal with them.

We will now explain,

1) Why the original creditor will nearly always be willing to negotiate

2) How your credit rating will be affected

3) How to get the best possible deal from the company

But please be forewarned that the whole process is far from easy, very time consuming, and very stressful because the credit card companies designed it to be that way.

After you read what's involved, and if feel like you're ready for it, then give it your best shot, and if you stick with it and persevere then you'll likely save yourself thousands of dollars.

If however you don't think you can manage it, or won't be able to stay the course, then consider visiting a BBB (Better Business Bureau) debt settlement company or credit counseling agency.

Why, When, And For How Much Will Creditors Likely Settle?

1) The original creditor will only reduce the amount owed if it's almost sure that not doing so would mean forcing you into bankruptcy, which is the last think that it wants to do.

2) You will need to be between 60-90 days in arrears, and the creditor will most likely check that you are a similar amount in arrears with all your other creditors too.

3) Due to the current economic situation, and the number of defaults, bankruptcies and foreclosures, more and more credit card companies are now willing to accept between 30%-45% as full payments of accounts, and although some will even accept 50% it's the exception and not the rule, so if you get 50% you got lucky, but don't expect it.

When dealing with collection agencies and debt collectors, you must get something in writing confirming the amount agreed upon as full settlement, but you're unlikely to get a similar letter from a credit card company, and to the best of my knowledge, you won't ever need one.

How Should You Pay The Company?

If the lender will let you pay with cashier's check or money order then that's what I'd recommend, but if they insist on you making your payment over the phone then I sincerely believe that it will be fine, and some people even pay them with a credit card :-)

How Will Your Credit Rating Be Affected?

After you make your final payment, your credit report will show either "settled" which is best, or "charged off", so try to get them to agree to "settled" at the beginning of your negotiations.

If you're credit rating was previously shot to pieces then you won't be very adversely affected, whereas if it was excellent, which is unlikely, then it will take a big hit.

The Negotiation Process

In spite of anything and everything that you might have heard or read to the contrary, credit card companies aren't obliged to help you, and the best way to approach them is using a calm, confident, and upfront approach, and whatever else you do, never ever try to bully them.

Don't expect the lender to be particularly sympathetic about your situation, because you got yourself into it, and what you're asking the company to do will cost it money, and probably a great deal of it.

Keep in mind that the person on the other end of the phone hears dozens of sob stories like yours every day, and that launching into yours will most likely only cause him or her to roll their eyes and mentally disconnect until you finish your spiel.

Don't rush to play the bankruptcy card, because although it might force the lender into making some concessions, it will also totally change the mood from one of negotiation, to one of confrontation, and you'll likely end up with less than you might have otherwise gotten.

EasyPublish™ this article - publishers click here

More articles by Michael Redbourn

Free Report!
Ten Essential Secrets Of Article Marketing ... Grab Your Free
Copy Now:

Need Content?
Regular Top Quality Content for your Blog, Ezine or Website ...
Delivered Direct,
For Free!
Click For Details