How to Negotiate Unsecured Debt

Consumers with large amounts of unsecured debt (such as credit cards and student loans) can find it exceedingly difficult to shoulder the burden of those debts and meet other monthly obligations.

For relief from the pressure brought on by unsecured debt, a consumer can negotiate with creditors to lower the interest rates and/or minimum payments and suspend over-the-limit and late fees for a period of time.

Instructions

1

Write a budget. List all your unsecured debts by smallest to largest balance. If loans have the same or similar balances, start with the one that has the highest interest rate.

Likewise, list all other monthly obligations and expenditures and compare the total with your net monthly income. Once you have a comparison, start identifying where you can begin to cut expenses. Those savings will be used to negotiate your unsecured debt.

2

Prioritize your accounts. The accounts with the largest balances should be negotiated first. Because of the size of the balances, chances are that even if the interest rates are relatively low; they will be the most costly on a monthly basis.

3

Negotiate your unsecured debt. Phone the creditors of the largest balances and ask to have your interest rate lowered or frozen, and over-the-limit and late fees suspended for at least six months. If they agree, request the agreement to be sent to you in writing.

In the alternative, you may write directly to your creditors and make the same requests, but you should include an explanation of your present circumstances. In most cases, credit card companies have hardship programs for account holders, but the account holders must qualify for the credit card company's specific criteria (which usually includes loss of spouse, unemployment, health issues, etc.).

4

Follow up with your creditors. It will be necessary to keep in contact with them to ensure any agreements are honored. Should any fees be incurred, the interest rate raised, or any other part of the agreement not be kept, you will have a written agreement to forward.