Tips on Talking Down a Creditor to Pay Off the Debt

If you find yourself drowning in debt, you may not have to resort to hiring a debt settlement company or even filing for bankruptcy. Instead, your first course of action should be to contact your creditors directly to negotiate a settlement. You may be able to reduce the amount you owe or your monthly payments. Be sure that your creditor for your protection puts any settlement agreement you reach into writing.

Prepare Your Case

Improve your negotiating position by preparing for your contact. Prepare a simple financial statement that shows your income and expenses and mail it to your creditor in advance of your phone call. Once the creditor sees that your financial situation is such that making the required payment may be impossible, he may be more willing to work with you. Creditors would rather receive at least some money than none at all.

Make the First Offer

Don't wait for the creditor to make the first offer or ask how much he will accept. Instead, tell the creditor how much you can afford to pay. You should ultimately be able to settle on a lower amount by negotiating up from your lower figure than trying to negotiate down from a creditor's higher initial offer. If you've done your homework in advance, your creditor is be able to see how much financial wiggle room you have, if any.

Stay Positive

Let your creditor know from the outset that your goal is to reach an agreement that is beneficial for both you and the company and maintain this approach during your conversation. Try to put yourself in the shoes of the person on the other end of the line and don't hesitate to express your appreciation for his willingness to discuss the matter with you. By becoming defensive or hostile, your conversation is sure to end quickly without you making any progress.

Be Persistent

Keep in mind that the person you speak to initially may be a customer service representative with limited negotiating authority. If you feel you are not making significant progress in your negotiation, politely ask to speak to a supervisor. In addition to having more decision-making authority, a supervisor often has a better understanding of the "big picture" and the advantages of reaching an agreement. If necessary, repeat the process until you find someone who is able to help you.