Occasionally, it might become difficult to make ends meet due to a lost job, a medical emergency, or one large unforeseen bill. We must act right away if we find ourselves unable to pay our debts or bills or if our creditors are starting to contact us. Fortunately, there are approaches on how to settle debt with creditors. We might be able to bargain with the company we owe money to.
Although it sounds scary, keep in mind that there’s a chance our creditors will be willing to work with us to find a solution that benefits both us and them. The following advice can help you bargain with your creditors. There may be several phone calls and some paperwork involved in this procedure. Act now. If we wait, things can get worse before they get better. Immediate action can save us money and free us from worry.
- Get Organized
Let’s take some time to compile and review the documents associated with our debts. I’m referring to the original loan agreement, its payment history, and any late payment notices. If we are missing any documents, we can obtain copies from our online account or from a representative of our creditor. It will be easier to stay focused and be ready for a sit-down with the lender if we have all the information required.
- Keep Our Story Straight
Our conversation will be with a negotiator for the lending company, not a counselor. Provide a brief explanation of why we can’t settle our obligation as planned, minus the drama. Make it clear what the difficulty is and that we’re resolved to get back on track. In Baltimore, bankruptcy attorney services may be obtained.
It will help if we write down and practice a few go-to sentences to sound convincing, like “I lost my job during the pandemic and haven’t kept up with the payments” or “I can’t earn as much now because of my health”. What’s important is to tell the truth, no matter what. We can’t run the risk of being perceived as deceitful.
- Know the Terms
What monthly payment amount are we able to make? Look at all of our necessary expenses and bills—things that we absolutely need to survive. For those we can live without, cross them off the list of expenditures. Once we’ve calculated our net income, we can then decide what we can afford to pay. Write that down and keep it for the negotiation later. It’s also important to be realistic about the said amount.
- Talk Directly to Creditors
Before they transfer ownership of our loan to a collection agency, make an effort to reach a deal with the original creditor. At this point, taking the initiative to negotiate directly with the lender might help us maintain a few points in our credit score. Once our obligation has been sold to a debt collector, we no longer have the chance to ask for more lenient terms, and what we owe would have already increased.
- Get Everything in Writing
Once negotiations are through, get any payback arrangement in writing as soon as you can. Ask the representative to send a letter that outlines the new terms. Once we receive that, we’ll review the document closely to make sure nothing has been added or left out. Pay only when everything is correct. If there’s an error, let’s make sure it’s rectified first before making payments.
In a Nutshell
Dealing with creditors when we’re unable to pay our debts can be difficult. Many borrowers feel hopeless when calls or letters from lenders come in. It’s important for us to know that lenders can surprisingly be ready to sit down for negotiations. Many of them will be willing to listen to what we have to say.
How to settle debt with creditors is not as complicated as many of us think if we have professionals who can help us out in the process. Richard Hackerman, a bankruptcy attorney, tax lawyer, and financial consultant, can help us with this.