Negotiating With Creditors

When it comes to negotiating with creditors, debtors should bear one thing in mind: you can catch more flies with honey than vinegar! Creditors are more likely to work with debtors who are cooperative and demonstrate an acceptable level of respect, rather than those who are belligerent and insist on denying responsibility for monies owed. After all, it does debtors no good to try to war against the man or woman who holds the future of their creditworthiness in hand. There is no need to bow and scrape in a disingenuous display of humility; but by being polite, considerate and compliant, debtors may win the heart of the lender and a little more time to catch up on delinquent payments. Creditors face the same financial problems that debtors deal with: they are consumers who must make mortgage and car payments in addition to running a business. Entrepreneurs have money invested in inventory, employees, and overhead; and when customers fail to make timely payments, that failure wreaks havoc with the owner's livelihood. In order to keep businesses solvent, creditors rely on customers to uphold their end of the installment buyer's agreement, which is a promise to pay on time.

No matter how long payment is delayed, delinquent bills don't simply vanish away, and the best recourse is to face indebtedness head on. Debtors should call lenders the moment it becomes apparent that payment cannot be made. Most account issuers are well aware of the problems consumers may face in making ends meet; and most lenders appreciate debtors who propose alternative payment arrangements. Making even a partial payment on a consistent basis proves to lenders that debtors are sincere about upholding financial obligations. When negotiating with creditors, debtors should try to suggest arrangements that are reasonable and within budget. Making unrealistic promises for payment simply doesn't work. It is better to offer to pay amounts that can be easily managed, rather than fail to keep unrealistic arrangements that wreak havoc with the household budget.

Debt collectors are only human and trying to collect money can be a thankless job. Collectors have to deal with angry and belligerent debtors who have no intention of repaying monies, and many agents are used to having to put up a fight to resolve delinquent debts. Sometimes creditors and debt collectors may feel that using strong-arm tactics are more effective than patiently and calmly addressing debtors about past due accounts. The end result may very well be a shouting match between two angry individuals with no money exchanged and a pending lawsuit or court-ordered judgment against the debtor. When negotiating with creditors who are irate and out of sorts, it's best to offer to call back at a time when tempers are less out of control. The Bible says that a soft answer is always the best response to anger. "A soft answer turneth away wrath: but grievous words stir up anger" (Proverbs 15:1).

When negotiating with creditors who are angry, debtors should simply speak quietly, reassuring the collector that the call or correspondence is merely a sincere attempt to try to resolve the delinquent account. Once anger has subsided, the debtor can restate their intention to make restitution without causing the creditor or collector any further undue distress. It is always a good idea to "Agree with thine adversary quickly, whiles thou art in the way with him; lest at any time the adversary deliver thee to the judge, and the judge deliver thee to the officer, and thou be cast into prison. Verily I say unto thee, Thou shalt by no means come out thence, till thou hast paid the uttermost farthing" (Matthew 5:25-26). Unless account records are in error, debtors don't need to antagonize collectors or try to disown the debt, but simply acknowledge that monies are owed and strive to make amends in compliance with creditor demands. Negotiating with creditors requires giving and taking on the part of both parties; and nothing can be resolved when either party insists on man-handling the other.

In the case of unsecured debts, or those in which no collateral is involved, debtors may offer to give creditors something of value to hold until the past due account is paid in full. The collateral is more of a guarantee of a promise to repay than empty and insincere promises. Debtors who are willing to make these kinds of concessions as part of negotiating with creditors may stand a better chance of reaching favorable terms. Debtors may also suggest making weekly rather than monthly payments in order to restore creditor confidence and clear up past due accounts. By breaking larger monthly amounts into smaller, more manageable payments each week, the debt can be reduced more quickly. Rent-to-own companies have long employed the pay-by-the-week policy to ensure that customers can manage a long-term lease agreement without default. Lenders may also accept debtor offers to take out an allotment from each paycheck in order to guarantee payment and demonstrate a willingness to honor obligations.

Once an agreeable repayment arrangement has been made, debtors should do everything possible to honor those commitments. Lenders and collectors will be happy to work with debtors who faithfully and consistently strive to clear up past due accounts and restore creditworthiness. A debtor's financial future and lending power rests on positive negotiating with creditors. Lenders who have a positive experience with delinquent debtors who honor obligations and are consistent in trying to resolve accounts can become a debtor's best advocate. Even if delinquent accounts get posted to consumer credit reports, lenders who have worked to help debtors resolve past issues will more than likely be willing to vouch for borrowers seeking future financing. Debtors faced with the formidable task of negotiating with creditors should always devise a reasonable repayment plan; contact the creditor and apprise them of a sincere intention to resolve the debt; and communicate respectfully with collection agents and creditors to ensure a more positive outcome and good prospects for borrowing in the future.

Negotiation Debt Settlements

A negotiation debt settlement is an attempt to convince a creditor to lower the balance a debtor owes in order to make a lump sum payment on that balance, and consider it to be paid in full. Negotiation debt settlements can occur between debtor and creditor, or between debtor, creditor and a third party agency. An agency works to negotiate credit account balances on behalf of the debtor. Many debtors are enlisting the help of representatives because these individuals have a proven track record of getting the credit account balances to a lower level than the average debtor. "Hear instruction, and be wise, and refuse it not." (Proverbs 8:33)

Settling is a difficult task because negotiations are not easily agreed upon. The creditor wants to see proof of inability to pay. This proof is usually found in credit and income history reports. If a debtor is delinquent on more than one account, and is in no position to earn more money, a negotiation debt settlement may be an option. If a debtor would make a good bankruptcy candidate then settling is an option. The reason for this being that a creditor knows they will receive no money if a request for bankruptcy is filed.

When an agency attempts a negotiation debt settlement, they have usually obtained the debtor's credit report and financial history. This enables negotiation debt settlements to proceed quickly. Once the debtor and the creditor have agreed to the terms, the new balance is paid, and the information is reported to the credit reporting agency. It is first the responsibility of the creditor to pass the information to the credit reporting agency. This frequently does not happen, and the debtor must provide proof to the credit reporting agency in order for the debt to be removed from the debtor's credit history file.

Agreements should always be in writing to avoid such catastrophes as paying off obligations, and payments not being recognized. One of the duties of a negotiation debt settlement agency is to ensure that the settlement agreed upon is in writing, and to ensure that the creditor conveys the new information to the appropriate credit reporting agencies. With the national consumer debt surpassing 2 trillion dollars, and the average households obligations above $18,000 (not including mortgages), it is no wonder negotiation debt settlements are in great demand. The best way to get out of this situation is never to get into it in the first place.

Debt negotiation and settlement is a business tool used by individuals or businesses to begin a plan of debt reduction. This is a solution that works to settle delinquent debts with a lump sum payment. With reduction or consolidation, a consumer can reduce or restructure business-generated or personal debt, by establishing an agreement with creditors to repay them at either a reduced rate or at an extended rate of payment. There are many options available to distressed borrowers.

Negotiating or settling debt is not a new concept, but it is a very useful financial tool in regaining control over present and future income. Some of the immediate benefits of debt negotiation and settlement are the end of creditor harassment calls or a significant reduction in those obligations related to credit cards and personal loans. Add to that the elimination of late interest payments or over the limit fees that can be astronomical. Finally, the consumer will have a fully developed plan with creditors that satisfies both their desire to be paid and the individuals ability to pay.

This program can help to reduce interest on personal credit cards or loans by up to one hundred percent. Restructuring the current debt load is a great way to get control of expenses. At the same time, this will allow a person to avoid bankruptcy. A well-structured debt settlement plan can not only restore peace of mind and financial reputation, but is also a great way to regain a solid hold on expenditures or allow a consumer to re-establish financial solvency in personal spending habits. One side benefit of debt negotiation and settlement, is the budgetary training that might have prevented credit problems in the first place.

Financial management is a way to begin to manage debt or to start to rise above the burdensome payments and excessive interest that come from making minimum credit card payments. If someone is trying to get out of debt, debt negotiation and settlement is one possible route to take. 1 Peter 5:10 says "But the God of all grace, who hath called us unto his eternal glory by Christ Jesus, after that ye have suffered a while, make you perfect, establish, strengthen, settle you." As it is God's desire for man to be established, it is important for each person to do what they can to maintain a settled lifestyle. The burden of excessive obligations can keep Christians from operating on an even keel. Negotiating or settling can be a start to walking away from these financial burdens.

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