How to Negotiate a Debt Repayment Fee Rate

If you owe large amounts of money to credit card companies or the servicer of your student loan, it's easy to panic. You might wonder how you'll pay all of what you owe. If you've lost your job during a difficult financial time and have had to take a lower-paying one, this challenge can be even more daunting. Fortunately, you might be able to negotiate lower monthly fees from your creditors. To do this, though, you'll have to prove that you have suffered a financial hardship that makes paying your debts without a renegotiation of them an impossibility.

Instructions

1

Build a case that you have suffered a financial setback and can't afford to pay your monthly debt obligation in its current form. To do this, make copies of your two most recent paychecks, current federal income tax return, savings and checking account statements, credit card bills and other loan statements. You'll use this paperwork to prove to your creditors that your gross monthly income has fallen.

2

Call the creditors to whom you owe the most money. Explain to them that you have suffered a financial hardship--tell them what it is--and can no longer afford to pay your monthly debt. Request that they renegotiate your debt repayments. Perhaps they can lower the principal balance that you owe. Maybe they can lower your interest rate. Or maybe they can restructure the terms of your debt so that you pay less each month.

3

Write a financial hardship letter. In it, explain to your creditors exactly why you can't afford to make your monthly payments. Some reasons might include a job loss, drop in weekly working hours or a serious medical condition that kept you from earning your regular paycheck. Also include in your letter your request to have your debt repayment negotiated so that you pay less each month.

4

Send your creditors the copies you made of your financial documents and your financial hardship letter. Your creditors will use this information to determine if your financial setback is serious enough to warrant a reworking of your debt repayments.

5

Agree to a specific reworking of your debt payments if your creditor approves your request. Make sure, though, that this negotiation, whether it be an interest rate reduction or a slashing of your principal balance, results in a monthly debt payment that you can afford.