How to Negotiate Debt Resolution Letters

If you've gone through a major change in life, such as a divorce, serious illness or corporate upheaval, you may have found it difficult to pay bills. There are plenty of debt negotiation firms that promise to negotiate with your creditors on your behalf. However, negotiations are something you can do yourself. Not only will you save the money you would have paid the debt negotiation firm, but you will also have an intimate sense of precisely where you are financially.

Instructions

1

Write a letter to each creditor. Written negotiations serve as an accurate record of what both parties have agreed to. Lay out your situation in a clear and polite manner. Explain specifically what happened to prevent you from meeting your obligation. Tell them that while your next step will likely be filing for foreclosure, you would like to meet your obligation to the best of your current ability. Begin with an offer of approximately 10 percent of the amount you owe. For example, if you owe $3,000 on a credit card, tell them that you can put together $300. Send this letter by certified mail with a return receipt requested. This receipt will serve as your proof that the letter was received.

2

Purchase a disposable phone. If you would like to make a follow-up call or feel you can better make your case by talking directly to someone, purchase a pre-paid disposable phone. This is the only number you should use to make your calls and the only number on which you should answer calls from creditors. Creditors are in the business of collecting as much as possible from you, regardless of your circumstances. While they would like to have your home number, do not give it to them. Tell them that you are working with this phone number now. No matter what they agree to verbally, tell them that you'll need to see it in writing before you remit any money. Give them the fax number at a local office FedEx or other business that will allow you to pick a fax up. You can also ask them to send it through the mail. If you have a fax at home, do not give them your home fax number.

3

Maintain detailed files. Create a separate file for each creditor. Place a copy of your initial letter in the file, any responses they send to you and any more correspondence you send to them. On the inside of the file folder, write the name of anyone you speak with by phone, along with the date and what was discussed. Once an agreement has been reached, put a copy of the final agreement in the file. Mark each file as "paid" as soon as your cashier's check has been received by the creditor. As with your initial letter, send settlement payments by certified mail, return receipt requested.

4

Remain calm no matter what you hear. Keep in mind that the creditor knows that you're in trouble and if you tell them that bankruptcy is your next option, they know that the most they can get from you is the amount you settle for. If you happen to be dealing with an especially pushy or rude collector, stay calm. Do not give the person any personal information, such as your place of employment, private phone number, email address or banking information. Calmly reiterate your inability to pay the debt in full and repeat the amount you would be able to come up with. They will ask you to borrow from friends and relatives and to sell items of value. Remind them that you're working with a fixed amount of money and have no other sources of income.

5

Request a short-term payment plan for larger debts. For example, if you have a furniture loan for $8,500 and you end up settling for $1,500, offer to make three monthly payments of $500 or five monthly payments of $300. Once they've agreed to take less for a debt -- creditors are not generally happy to string out payments -- make it clear that it's the best you can do. Follow through on each payment, missing one gives the creditor the right to back out on the agreement and keep the money you've already sent.