How to Negotiate With Creditors Step by Step

In any negotiation, there has to be leverage. While credit agencies have reputations of being bullies, keep in mind that you have what they want -- money. Their entire existence centers around the thing that you have. With that in mind, you have more rights than you think and, with a cool head, a little preparation and knowledge, you can find a way to work with your creditors to reach a fair settlement.

Instructions

1

Evaluate your situation. Before you make any deals, get honest about your financial situation. Use budgeting tools to know how much money is coming into your bank account and be aware of how much you can afford to pay.

2

Learn the law. A debt collector cannot threaten you with arrest or misrepresent the amount you owe. You should be aware of what creditors can and cannot say. The Federal Trade Commission has valuable resources on the rights of the consumer. Also, learn the laws in your state regarding debt collection and statute of limitations on debt.

3

Contact your creditor. You might be able to contact your creditor directly, such as the credit card company or cell phone company, to make arrangements. They may have turned over the debt to a collections agency already, meaning you have to deal with the collections agency directly.

4

Make a plan. You can agree to make one lump payment or, depending on the nature of the debt, negotiate lower payments over a period of time.

5

Ask for a supervisor. When you are honest and fair in your attempt to negotiate a payment and the person on the other end of the phone is being obstinate, don't be afraid to ask for a supervisor. The supervisor may be able to make negotiations that the customer service agent can't.

6

Get all agreements in writing, especially when dealing with a collection agency. In fact, some experts suggest calling a collection agency only to get their mailing address. Don't feel pressured to make a payment until the terms of the agreement have been outlined in writing.