What Should You Bear in Mind During Debt Negotiation?
J.J. Yong
Are you a good negotiator? Your interpersonal skills may be good but things tend to be different when you are managing your own debt. Having debt is indeed stressful and we feel depressed when we have a lot of outstanding balances which we can't cope with. In order to pull ourselves out from debt, we need to bargain with our creditors. It is very important for you to know what should be avoided during the negotiation process.
Here are 3 key areas you need to pay attention:
The timing to settle your debt
The timing must be right. Do not start any negotiation with your creditor if your past due is less than 3 months. In general, the creditors will never agree with settlement if the debt is "too young". They still think positively that the debtors are able to pay back their debts.
The settlement offer
When you are proposing your settlement amount, please be REALISTIC. Don't ask the creditors to reduce a huge portion of your debt. The creditors will feel that you are taking advantage to run away from debt. A settlement amount which is equivalent to 60% of your total debt is usually well accepted by the creditors. At the same time, be consistent with your proposal. Do not propose differently every time you call up your creditors.
How your credit is reported
When you are bargaining, you need to take care of your credit. Ask a favor from your creditors to report your debt as "paid" rather than "settled.
To sum up, if you don't know how to negotiate with your creditors in a proper way, you will not be able to reduce your total debt and yet your credit score will be badly damaged.
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