Debt Negotiation Strategies


In today’s economy, it is common for most people to have credit card debt. In fact, it is estimated that the average American has at least five credit cards with a balance totaling more than $10,000. Sometimes, it can be a challenge to make all those payments, in addition to juggling rent, utilities, groceries and any other bills you have every month. If you are having problems making your credit card payments, you might consider debt negotiation.

What is Debt Negotiation?

Debt negotiation is the process of reaching an agreement to settle your credit card or other debts. In some cases, you can work with a credit counseling service to negotiate a settlement agreement with your credit companies. However, many people negotiate directly with their creditors.

When you negotiate a settlement agreement with your creditors, it may end up being a combination of solutions that reduce your debt. For example, you may be able to reach an agreement in which they eliminate accumulated late fees and other charges on your balance. You may also be able to reach an agreement for a lower interest rate or a single lump sum settlement payment. Ultimately, the goal of debt settlement is to reduce your debt and resolve your credit issues.

Debt Negotiation Strategy #1 – Keep a Log

Debt negotiation is a process that often takes numerous telephone calls and patience. Keep in mind that most customer service representatives do not have the authority to make debt settlement agreements or offer you anything more than a hardship program. Unfortunately, hardship programs do not actually reduce your debt – they simply extend the length of your indebtedness and only offer short term solutions.

As you make your telephone calls, keep a log of the date you call, the time you call, and the name and operator number of each person you talk to. If you reach any form of agreement, make detailed notes. Also, keep detailed notes regarding any contact information you are given, such as a telephone number, email address or other information you may need in the future.

Debt Negotiation Strategy #2 – Ask for the Loss Mitigation Department

Since customer service representatives do not have the authority to make agreements, you may want to try being connected directly to the department that may be able to help you most. When you get a live person on the telephone, ask specifically for a “loss mitigation representative” or the loss mitigation department.

The loss mitigation department attempts to prevent customers from simply walking away from their debts. Let’s face it, banks and credit companies would prefer to get some level of payment rather than nothing at all when a customer walks away. By working directly with them, rather than going through customer service, you may be able to reach an agreement much more easily.

Debt Negotiation Strategy #3 – Be Realistic

The reality is that unless you are willing to walk away entirely from your credit obligations and deal with the long term consequences, and there are very real and long-lasting consequences, then you will have to pay at least a portion of your debts. When you negotiate with your credit card company, have a number of viable solutions to offer that you can realistically fulfill.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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