Get Out of Debt Part 5: Negotiate Accounts

Welcome to Part 5 of our month-long series on getting out of debt. Today, we will discuss options to make your debt burden a little easier by negotiating your accounts.

Did you know you have the power to make changes to your credit accounts? To negotiate things like payments, interest rate, balance due, etc? Let’s talk about the ways you can start to implement this.

1. Deal with creditors – not collectors.

When attempting to get on track with your finances, it’s helpful to be proactive. If you can’t afford a payment, deal with the creditor prior to the account being sent to collections. Typically, things like medical bills, rentals, and leases can be negotiated prior to them being sent to a collector. They are reasonable people, and would rather see the account get paid than it be sent to collections.

2. Tell the truth.

When dealing with creditors, tell the truth about your story. Whatever your reason is for asking for lower payments, interest, etc., tell the truth. DOn’t make up a different story each time dealing with a creditor, as that will definitely backfire. Instead, talk yourself through a few key phrases you can use with different scenarios.

“I lost my job, and we are trying to get back on track.”

“My interest rates have doubled, and I can no longer keep up. I am re-evaluating my situation to see what I can afford.”

Whatever it is, tell the truth, and tell the same truth across all accounts.

3. Keep records.

When you work with a creditor or collector, keep records of all conversations. During conversations, take notes of who you spoke to, what you discussed, etc. When you have re-negotiated the debts, get the new agreement in writing, as to avoid any future conflicts. There have been situations where people have had collectors coming back years later, for a debt one thought was long taken care of. If you have detailed records of the conversations, you can show this as proof of the agreement.

This also prevents any changes from being made. If the new payment agreement is in writing, it cannot be altered without your knowledge.

4. Keep it civil.

Often, collectors will threaten lawsuits, seizure of property, etc. First, don’t lose you cool. This will not help the situation. Remain calm. If you find yourself becoming escalated, end the conversation and call back at a later time. You can also ask to record the conversation, as this will keep collectors civil and the conversation focused.

Don’t be afraid to ask questions also. Sometimes, collectors will make empty threats. If they are sincere and honest threats, they will be able to answer your questions about them. IE: “When can I expect to be notified of this lawsuit?” It will only help you to ask questions about the circumstances.

5. Evaluate your finances.

Before going into negotiate your accounts, know what you can and cannot afford. This helps you stay focused during the negotiation, and you have an end goal in mind. Remember to start with your budget – this will tell you exactly where you money is, and what you can afford.

Don’t have a budget? Get started with our free budget planner. 

During these conversations, you can negotiate nearly all aspects of the debt. You can negotiate interest rate, balance, and payment size. It doesn’t hurt to start by asking for more, with the expectation they will counter lower.

 

There you have it! Negotiating your account is an empowering tool in your financial toolbox. It gives you some authority over what gets paid and how to pay it. Even better, it can help set you up for success with starting the journey to become debt free.

Don’t forget to check back on Friday for the next part of our series.

 

What has been your experience negotiating accounts, if any? Tell us in the comments below.