You can try to negotiate interest rate changes and principal reductions with your creditors at any time. However, creditors are under no obligation to make changes to your existing debt agreements. You stand a better chance of successfully negotiating a debt settlement if you can convince creditors that the deal suits all parties. Therefore, you should only enter into debt negotiations when you have a strong case to present.
Preemptive Action
Many people wait until they have already fallen behind on debt payments before talking to creditors about debt reduction or payment plans. Contact creditors before you missing payments and explain the situation. If you have a temporary cash flow problem, creditors may agree to change your payment date or waive late fees. Creditors tend to look more sympathetically on people who are proactive about highlighting upcoming problems as opposed to people who say nothing and then want to talk when they have already missed their payment date.
Special Programs
Look out for government sponsored debt reduction programs that could help you negotiate with your creditors. In 2009, the federal government launched the making home affordable program that aims to help people whose mortgage debt exceeds their property value. Under the plan, lenders are encouraged to negotiate interest rate reductions and principal reductions. This plan and similar kinds of programs are normally only available for a limited time so you should attempt to become involved in any such programs that can benefit you even if you are not yet having problems with paying your debt.
Rival Offers
Banks make huge amounts of money from interest payments on credit cards and loans. Your bank may not want to lower your interest rate because doing so would cut into their profits. However, if you shop around for rates and find better deals elsewhere, tell your lender about the rival offers that you have received. Your lender may agree to cut your interest rates in order to prevent you moving your account to a competitor.
Improving Your Credit
In order to make a large purchase, such as buying a home, you need to have good credit. If you are thinking of buying a home within the next few years, try to improve your credit score in preparation. Pay down existing debts and pay off any outstanding balances you owe. If you can negotiate debt settlements on your delinquencies, they will show as settled, rather than delinquent on your credit report. Your creditors stop making monthly reports on those old debts and over time your credit score should begin to improve.
0 comments:
Post a Comment