Debt negotiation is also known as debt settlement. It is one financial solution which enables the debtors to reduce their total outstanding balances after getting the approval from the creditors. Let’s take a look at the main elements in the negotiation process:
- Before you start bargaining with your lenders, you are required to analyze your current financial abilities. Find out how much you can afford to offer to your creditors to settle your debt one time off.
- It is important to sharpen your communication skills before bargaining with the creditors. You need to make sure that the messages you want to convey to your creditors are clear and precise. At the same time, you are reminded to be consistent in making your offer.
- Having debt is stressful. You need to change your mindset in order to become more positive so that you can handle the tele-conversation with your creditors with great patience and good mood. You need to be prepared that you can’t complete the negotiation process in a few minutes. It may take months and even years to complete.
- Once you have decided to go for settlement, you need to accept the truth of getting bad credit. In order to convince the creditors to approve your settlement proposal, you need to show that you have past due for at least 3 months. The missed payments will definitely affect your credit. If you still make your minimum payment on time, your creditors will reject your request to reduce the total debt. Hence, you need to decide whether you are willing to have negative item on your credit report. If you do not want it at all, debt negotiation is not your choice.
To sum up, reducing the debt is not as easy as you expect. You need to have good understanding about how it works before starting the negotiation.