How to Negotiate with Creditors

Managing financial troubles can be complicated. Unemployment, unforeseen medical expenses, and unexpected increases in living expenses are just a few of the factors that cause many people get in over their heads. When you’re drowning, credit solutions can be hard to find. However, there are ways to negotiate with creditors before your situation gets worse. Contact your creditor immediately and ask about the following credit solutions. The answer may be simpler than you think.

  • Be honest. The best way to facilitate credit solutions is to employ open communication. Your creditors will ask for an explanation regarding your financial troubles, so be clear and concise. Creditors will be more willing to work with you if they have a full understanding of your situation.
  • Present a plan of action. If your troubles are temporary, develop a payment plan to present to your creditor. After explaining your situation, follow up with a plausible credit solution. For example, if you cannot make your minimum payment each month, ask them to reduce the amount for a short period of time until your finances improve. Reiterate that you are committed to paying off your debt and keeping your account in good standing.
  • Ask for a lower interest rate. As part of your plan of action, ask your creditor to provide a lower interest rate in order to lessen the burden. If they are unwilling to lower your rate, mention any credit offers you have received from competitors. They may be more willing to help you if you are considering a balance transfer.
  • Cover worst-case scenarios. If your credit woes are more permanent, be sure to let your creditor know. Inform them that while you wish you could pay, it may not be a possibility. If you have reached the point of ruin, mention bankruptcy protection. Your creditor does not want to lose your business to bankruptcy, and they may be willing to settle for a partial payment. Offer what you can afford to pay, but be aware that creditors can be tough negotiators.
  • Practice follow-through. Credit solutions are based on actions and their results. When negotiating with creditors, be prepared to follow through with everything you offer. Don’t set up a payment plan you cannot honor simply to pacify the problem. If you mention a balance transfer, make sure you are pre-approved by another creditor before making insinuations. Finally, state your case productively with a goal in mind. Creditors work with financially burdened clients every day, and they are more apt to help those who are willing to help themselves as well.

Finding credit solutions may be challenging, but it is possible. Before reacting badly to a difficult situation, take time to plan and work with your creditor. The gravity of your troubles may be less extreme in the end.