What’s Holding You Back from Negotiating with Your Creditors?

When you’re struggling to put food on the table and a roof over your head, your credit card payments can get behind. If you’re delinquent more than 60 days, you could suddenly find your interest rate has sky rocketed and your minimum payments are more than what was previously expected.

If you’re in financial crisis, the best thing to do is to call your creditors and explain your financial situation. Be honest and sincere about how you’d like to resolve your accounts and negotiate a new payment plan that will work with your budget. However, many consumers never make that phone call and their debts are charged off. Once that happens, creditors stop negotiating and you’re at the mercy of third party collection agencies.

What’s stopping many people from asking for the help they need?

  • Anger – Financial crisis can be extremely stressful. They might feel like not paying their bills is somehow getting back at the creditors without considering the long-term consequences.
  • Apathy – When people are overwhelmed with debt they can become apathetic about their situation and prefer to hide from their problems rather than deal with them.
  • Embarrassment – Everyone makes mistakes, but it’s really hard sometimes to admit it. People don’t like feeling that they’re foolish or inept with their finances.
  • Fear – People are afraid of letting their creditors know that they’re in financial crisis. They’re afraid that further penalties might be imposed if they raise the red flag.
  • Lack of Knowledge – Many people don’t realize that they have the right to ask for help or don’t know what they can ask for.

None of these emotions are going to help you deal with your debt problems; instead they can interfere with the negotiation process. When trying to deal with your debt problems, you should use these five tips from Miss Money Bee:

  • Bee Polite – Instead of being angry, be polite with your creditors. Have a conversation with your creditor without accusing them of taking advantage or trapping you into a higher interest rate. Instead, point out that you can’t pay the current payments and propose a compromise that will pay off your debt without breaking your budget.
  • Bee Proactive – Don’t wait till the day before your bill is due to call and ask for help. If you know that you can’t make your payments, call your creditors immediately. If they can’t offer an immediate resolution find out the timelines in which they’ll get back to you and follow up as necessary.
  • Bee Honest – Be honest with yourself and your creditors on what you’re capable of paying. The worst thing you can do is agree to a higher payment because you’re embarrassed and then not be able to make it.
  • Bee Firm – If you can only pay a certain amount each month, don’t be afraid to stand your ground. Sometimes the person on the phone may not be authorized to make a lower payment. Ask for a supervisor if you’re not getting the help you need.
  • Bee Prepared – Don’t call your creditors without knowing how much you can pay. Make sure to research your options thoroughly before making a payment agreement.

If you’re getting nowhere with your creditors, politely end the conversation and seek the help of a professional, such as a credit counseling agency. They are knowledgeable in different debt solutions (i.e.  debt consolidation, debt settlement and bankruptcy), will review your finances and help you find a personalized solution that works best for you.

About the Author

The following post is from Kathryn Katz, a Certified Personal Finance Counselor who works for Consolidated Credit in Ft. Lauderdale, Florida. Their credit counseling agency helps families through financial crisis using credit counseling, debt consolidation and financial education.