Using debt negotiation strategies can help solve your stubborn credit problems. While most people associate it with a debt expert, it is possible for you to accomplish this on your own. You just have to familiarize yourself with the process so you can succeed at this. If you learn how to negotiate on your own, you will learn a lot of things along the way that may help you stay out of debt.
If current statistics are to be considered, it is evident that consumers should learn more about how to use debt properly. As of early in 2019, the consumer debt reached $4 trillion – thanks to the excessive spending during the holidays. This increase was mostly attributed to credit cards but auto loans and student loans are also to blame for the massive increase.
While we will not judge the circumstances by which these debts are incurred, it is evident that Americans need to work harder in paying off their debts. Another set of statistics reveal that more than half of credit card owners have credit card debt. Not only that, 3 out of 10 of them blame their discretionary spending for the balance they accumulated.
Obviously, we have a long way to go when it comes to learning how to use credit properly. But for now, it is important for us to do something about the current balance. That means getting to know debt negotiation strategies that will help you reduce the overall balance that you owe.
3 effective DIY debt negotiation strategies
Negotiating debts, admittedly, is not for everyone. You need to be in a state of financial hardship to be able to negotiate with your creditors and lenders. Not only that, it can be tough to convince them to allow you to pay lower than what is expected of you, or at least give you a temporary reprieve. This is probably why a lot of people opt to get the help of a debt relief expert. But if you do not want to pay for a service that can help reduce your debts, you can actually do it on your own.
Here are three strategies that you can use to negotiate your debts.
Offer a lump sum payment
This is actually just like debt settlement. You will explain to the creditor and lender that you are having a hard time paying off your debts. However, instead of stopping your payments, you are willing to pay a lump sum amount upfront. This amount will not be enough to cover your debts, but you are willing to give it to the creditor or lender as long as the rest of the balance can be forgiven.
This is one of the tricky debt negotiation strategies but it can help you save a lot of money in the process. But believe it or not, if you are on the brink bankruptcy, some creditors and lenders can agree to this arrangement. And in case you get them to agree, you have to put that in writing. That way, you have proof that they agreed to forgive the rest of your debts after you pay the lump sum amount. You should also make sure that the lump sum money that you will offer will not exhaust all your extra money. That way, it will not leave you too restricted financially.
Ask for a hardship plan
This is applicable only if you are facing a short-term financial crisis. You can talk to your creditors and lenders to request a hardship plan. This will lower your monthly payments significantly. If they agree, you will be allowed a couple of months of low payments. It is even possible for you to pause payments completely. Most of the time this would mean the interest will continue to accrue. So your debts will grow – but you do not have to pay anything until after you get your finances back on track. You can try to negotiate the waiving of some fees, but that is not a guarantee.
Of course, you have to find out what is fueling your financial crisis first. That way, you can lower the chances of falling into another crisis.
Negotiate an agreement to remove fees
The last of the debt negotiation strategies that you can do is to ask the creditor or lender to work out a plan that will make your debt burden lighter. It may not be like the reduction that you will get from debt settlement, but having the fees and charges waived may be good enough. You can also negotiate for a better interest rate. Ask them to lower it. This will help you afford the monthly payments. Negotiate to have your debts restructured so you can completely pay it off.
These debt negotiation strategies will not bring you immediate debt freedom. You still have to pay off the agreement that you will have with them. You need to make sure that you will commit to your side. If you fail to meet the terms of the agreement, the creditor or lender might forfeit everything and place you back in your original terms.
When it makes sense to use a debt professional
If you think that implementing these debt negotiation strategies is difficult, you should consider getting the help of a professional. Do not force it because if you make a mistake, you might end up making things worse. In one report, it is revealed that the money mistakes of Americans are currently costing them $1,230. This is because they lack enough knowledge to manage their finances well.
While there is nothing wrong with doing things on your own, you should be honest with yourself if you can really do it or not. This is especially true if you have a lot of debts and your financial resources are limited. You cannot afford to waste money on mistakes that could have been avoided if you just got help in the first place.
To help you figure out if you need help with debt negotiation strategies, here are the signs that you need to look into.
If you do not have time
First of all, there are just people who are too busy to be efficient at managing their debts. It is not like they are irresponsible. They just have too much going on that they are easily distracted. This makes them more prone to mistakes. They will have the tendency to rush through decisions because they lack the time to think things through. If you can relate to this, then you are better off getting the help of a professional debt expert. They can come to you with the best options that suit your financial situation.
If you feel intimidated
Another reason to get professional debt help is when you feel intimidated by your creditors and lenders. If you do not know what to say to them, let the experts do it for you. If you are not feeling confident, that can affect how the creditors and lenders will deal with the negotiation process. They will probably not give in to your request because they can easily intimidate you.
When you get debt experts to negotiate on your behalf, you can benefit from their working relationship with the creditors and lenders in the industry. They will know what to say to get them to agree to your request. It will not just be easier for you, it will also be faster.
If you are confused about your options
Finally, you should rely on the debt negotiation strategies of experts if you are not even sure what debt relief option will get you out of debt successfully. The truth is, it is not enough that you know the various options you have. It is important that you learn how to choose the right debt solution. This is can tricky because it means you have to consider a lot of things like your payment capabilities, financial goals, budget plan, etc. It is important to know how to interpret these details so you can identify what to do. If you cannot do it, then let an expert choose among the debt negotiation strategies to figure out the best path for you to take.