Debt Negotiation Techniques

If you've been in debt, then you know how stressful it is when you begin to realize that you simply can't make those monthly payments on your debt. And that's when the collection calls begin. You may be tempted to avoid the calls, but try and meet them head on with your own negotiation techniques. You may find that you can settle the debt for less than you thought possible -- and be debt-free faster.

Prepare Yourself

Before you start negotiating with your creditor, do some major preparation so that you are informed and organized, ready for the call. Too often, creditors prey on those debtors who don't know or understand their rights, and don't even know their contractual obligations. Pull out all of the documents that you've received in dealing with a particular creditor. Read the contract you signed to get a better grasp on what you agreed to do. Also, check your state's legislation concerning credit, the statute of limitations as well as harassment laws for particularly persistent collectors. You want to be sure that you're on the offensive, rather than the defensive, in your negotiations.

Make the Call

Call your creditor and indicate that you'd like to talk about your debt. Establish a relationship with the person to whom you are speaking. Don't get angry, stay calm and friendly. Your creditors are more likely to deal with a person they like. Don't ask for favors or handouts, and don't explain why you couldn't pay. Be straightforward and firm, and offer to pay a settlement for about 50 percent of the amount that you owe them. They will probably come back with another number, and 50 percent is fairly low. But you've established a real negotiation, rather than your creditor simply refusing to agree to anything other than the amount owed.

Record the Deal

Once you've negotiated a deal with which you and your creditor are both happy, get it in writing. Write up a contract with the new amount on it, with the new terms of when it will be paid, as well as any other terms that you've agreed on, and fax it to your creditor to be signed and faxed back. Keep it on file for any further questions you or your creditor might have with the agreement. If you are worried about the creditor's honesty, send the agreement via certified mail so that you have a receipt that they've received the document. Hold up your end of the agreement, and your creditor will have no choice but to hold up hers.