How To Know If You’re A Good Candidate For Debt Negotiation

If you have a personal line of credit, some medical bills and a couple of credit card bills you would be a candidate for debt negotiation. However, you might not be a really good candidate.

The warning signs

There is some warning or danger signs that you’re headed for trouble with debt. When this is the case you might be a very good candidate for debt negotiation.

For example, are you receiving calls from your creditors? Are you letting your bills pile up in a corner and gather dust? Have you taken cash advances from one credit card in order to pay other bills? Do you have to prioritize which bills you’ll pay this month because you can’t pay them all? Or maybe you’re using your credit cards for everyday purchases such as gas and groceries?

If you answered “yes” to several or all of these questions then you might be a very good candidate for debt consolidation.

Negotiating with your creditors

What you don’t want to do in negotiating with a creditor is just call and just ask for help. Many creditors will be willing to work with you but only if they know exactly what it is you want. In other words you need to be specific. For example, if you have high interest credit card debt you might try to negotiate a reduction. If you were able to get credit card debt at 19% or higher negotiated down to, say, 12% your payments would be lower and it might be easier for you to make them.

Although most people don’t realize this it’s also possible to negotiate a timeout of two, three or four months during which you would not be required to make payments on a debt. If you were able to do this you have time to organize your finances and maybe get caught up on your payments. Of course, some lenders will continue to charge interest on your accounts so it’s important to learn whether this would be true before you agree to a timeout.

Try converting credit card debts into payment plans.

If you have a lot of credit card debts you might be able to get them converted into payment plans. You would most likely have to give up those credit cards but in turn you would have a fixed payment and a fixed term – or amount of time before you would be debt free. This could make it easier for you to pay on those credit cards and might increase your peace of mind.

Offer lump some payments.

Short of declaring bankruptcy the ultimate way to pay off debts is through debt settlement. If you have the cash available you could contact each of your lenders and offer to make lump sum payments to settle your debts but for much less than their balances. If you’re a reasonably good negotiator and can prove that you’re having a serious financial hardship you might be able to settle your unsecured debts for as little as fifty cents on the dollar.

Get some counseling

Before you rush off to try to negotiate with your creditors you might try consumer credit counseling. There are numerous credit counseling agencies available on the Internet and there may be one where you live. Whether you choose an online or local agency you will have a debt counselor that will review your finances and probably recommend a debt management plan. This would consolidate your debts because if your lenders approve your debt management plan you will no longer be required to pay them. You will pay the credit-counseling agency once a month and it will distribute the appropriate funds to your lenders. When you sign up for a debt management plan you will probably be required to give up your credit cards and not take on any new debt of any kind until you complete your program, which generally takes about five years.

Stay calm and consider your options

No matter how deeply you’re in debt don’t panic. As you have read there are solutions available and debt negotiation is one of the best of them. Define what it is you want from each of your creditors before you start contacting them. Be prepared to have to make multiple phone calls before you get through to people that have the authority to negotiate with you. State what it is you want and always be polite and civil.. Treat the customer service reps you talk with politely and no matter what’s said keep your anger in check. Always remember the old saying that honey attracts more flies than vinegar