Do you have plans for negotiating debts on your own? Debt negotiation is a great option to get out of a tough credit situation. However, some people hesitate because they feel like it is only something that can be done by a professional.
Admittedly, there are some people who cannot negotiate debts on their own. According to studies, people who are financially vulnerable will not feel confident that they can succeed in the negotiation process. When you have a lot of debts, it is more likely that you will feel vulnerable with your finances. It is not surprising if people with debt feel like a failure after mismanaging their finances. This is a natural reaction that makes them feel embarrassed about their financial situation. This is enough to make them feel self-conscious – especially when they are trying to negotiate their debts.
But despite this mindset, it is possible to be successful at negotiating debts on your own. You just need to accept that you made a mistake. There is nothing wrong with making mistakes. What is more important is your ability to own up to it and accept responsibility for it.
If you are not sure how to get out of debt, you have the option to hire a professional. But if you do not have the budget to pay for their fees, you can opt to do it on your own. You just have to follow the rules and understand the steps that will guide you through the debt negotiation process.
4 rules when negotiating debts
There are 4 important rules to follow when you want to succeed in negotiating your debts.
Know the right time to negotiate
You cannot just call your creditor to negotiate your debts. You need to be in the right financial situation because you can use it to get favorable terms from the creditors or lenders you are negotiating with. If you are part of the majority of millennials living from paycheck to paycheck, it is safe to say that it is the right time to negotiate your debts. You can say that you are in a tough financial situation. Indicate that you are still willing to pay off your debts but you need a different repayment scheme. You want to have a payment scheme that will not feel too much of a burden on your budget plan but will not incur penalties and charges.
Make sure you are talking to the right person
It is important to make sure that you are talking to the right person within the company. When discussing your debt situation, ensure that you are calling the official number of the creditor or lender. In case you did not initiate the call, do not give your information freely. You can opt to cut the call so you can initiate the call through their official number. Ask them to verify the company they are calling from and provide you with the details of your debts. This is to ensure that they are calling the right person and you are not being called for a debt that you do not owe. They can send you a document through email to prove your debt. Only then should you continue to converse with them.
Research your rights
If you want to be successful in negotiating debts, you have to be knowledgeable of your rights as a consumer. There are various laws protecting your rights – even if you are in a position wherein you cannot afford to pay off your debts. For instance, you should know that you cannot be jailed for failing to pay your debts – as long as it involves the right type of debt and you are in a real financial emergency. It is also important that you know that you should not be threatened or harassed for your debts – even if you cannot afford to pay it back. You have every right to get verification for the debt that is being collected. This is important information that you should know because it will help you negotiate better. It will also ensure that your rights will not be abused.
Be honest if you need help
According to reports, people who have seen a professional for financial help are more aware of how to handle their finances to help them in the future. While negotiating debts on your own are admirable, it is admittedly very hard. Not everyone knows how to do it. If you know that you do not have the guts to talk to your creditors and lenders, be honest with yourself. If you do not have enough time to negotiate your debts, then get help. Sometimes, if you force yourself to negotiate when in truth you have no idea what you are doing, then you might do more harm than good. Just go to a professional so you will not waste your time and money.
3 simple steps to negotiate debts
Now that you know the rules that will help make negotiating debts on your own successful, it is time to get to know the steps that you should follow.
There are three simple steps that will help you be successful in DIY debt negotiations.
Step 1: Figure out how much you can afford to pay
Start by being honest about how much you can afford to pay. You need to look at your debts, get to know the terms, and have a clear understanding of your financial situation. These are the basic information that you need to know for you to face your creditors, lenders, or even debt collectors. Apart from knowing your rights, you should know how much you can really afford to pay. When negotiating, you do not want to promise or agree to something that is beyond your budget. Not only that, you want to know which debts you can negotiate. Sometimes, you will force them to agree to your request only to realize that they can seize a property that you have put up as collateral for the debt.
As you can see, not knowing the details will put you at a disadvantage. Make sure you come in prepared because your knowledge will give you an edge as you are negotiating debts.
Step 2: Negotiate your debts with the right person
This will keep you from wasting your time by going from one person to another. Make sure you are talking to the right person to negotiate your debts. They should be a representative of the creditor or lender who has the authority to approve your requests. As you are negotiating debts, make sure that you are firm with what you can afford. Not only that, try to get as much as you can in the process. There are many things that you can negotiate. You can negotiate for a lower interest rate or a lower monthly payment. It is also possible to have your fees and penalties waived or your credit report. Or you can even have your total balance reduced. It all depends on what you really need what you are willing to negotiate.
Step 3: Document everything
Once you have reached an agreement after negotiating debts, you need to ensure that everything is in black and white. This can be in email or in an actual written document. What is important is that there is an official writing of what you agreed upon and it should be signed and acknowledged by an authorized representative of the creditor, lender or debt collector. This will keep things official and will make sure that they cannot back out of what was agreed during the negotiation process – especially if it involves a debt reduction. Do not send payment until after you have a copy of this document.
As you can see, negotiating debts on your own is not impossible. During the process, you will surely learn a lot and it will improve your financial knowledge greatly. Not only that, it will help you learn your lesson. Getting out of debt on your own is hard. The harder the experience, the less likely you will be irresponsible with the use of credit in the future.