How do you negotiate with creditors?

Dealing with debt can be incredibly challenging, especially if your financial situation makes it hard to stay on top of your monthly payments. Once you start missing them, you can expect to get calls from your creditors, then potentially debt collectors.

When you’re in that situation, paying the debt in full likely isn’t an option. But learning how to negotiate with creditors can help you gain relief from the constant communication and also settle for less than what you owe.

We always suggest consulting a professional, like an attorney who knows the law and can protect you through the process of settling debts with creditors. But if you’re going to try to negotiate with your credit card companies on your own, follow these steps.

1. Stop Using the Credit Card You Are Trying to Settle

This is an important first step that’s pretty painful for a lot of consumers to accept, but you’ll want to stop making purchases with your card and definitely avoid requesting a cash advance or balance transfer.

If you have multiple credit cards from the same card issuer, make sure you stop using all of them while you’re beginning the negotiation process.

For example, if you have two American Express cards — one you want to settle and the other you are currently using — it’s unlikely that the creditors will negotiate with you. Also, don’t open any new cards, especially from the same creditor you are trying to negotiate with.

2. If You Can’t Pay Your Cards, Stop Trying

In a lot of cases, credit card companies won’t even consider negotiating if you can’t provide evidence of financial hardship.

Trust me, they’re more than happy to continue to accept your minimum payment for the next 20 years. You’ll end up paying a mountain of interest, and you may even rack up more debt if you continue to use your account.

As a result, it may be necessary to stop making payments on your credit cards if you can no longer afford to do so. Creditors start reporting late payments when you’ve been late for 30 days or more, so doing this will negatively impact your credit score. But if this process can give you a second chance to get your finances in order, it may be worth it.

3. Be Patient

It’s unlikely that your credit card issuer is going to accept an offer to settle as soon as you miss a payment. It may not even happen after the first or second month of being behind.

The time period, after which creditors are willing to negotiate a settlement or resolution, may be as short as 90 days from the date of your last payment or several years. So you may need to be patient as you wait until they’re ready to take a seat at the negotiation table. You will receive calls from creditors during that time and it could be a lot of calls too. This is the challenging part for sure and where you might think it’s best to use a professional to navigate the missed creditor payment process.

4. Be Prepared for Credits Calling About Your Delinquent Debt

Throughout this process, expect a lot of phone calls from the creditors, some of which can be borderline harassment and can include pressure to make or set up payments on your delinquent debt. While you want to do this on your own, it is a lot of work with a lot of problems and details you may not be aware of that can impact your credit, taxes and bank accounts.

Working with a law firm that focuses solely on debt collection matters for consumers and debt resolution solutions when you’re in debt and behind on your payments can help you and make sure that the collection agency is following the Fair Debt Collection Practices Act, which lays out when the credit card company can contact you, what they can and can not say to you, and other illicit debt collection practices that can make your life challenging.

Make yourself familiar with these if you’re going to handle debt collection on your own and the complaint process in case a creditor does not follow these rules, so you know how to protect yourself from creditor harassment.

5. Negotiate With Creditors

It’s important to be firm as you negotiate the terms of a settlement or resolution with your credit card company. Here are some aspects of the negotiation process to keep in mind to ensure that you’re on the right track:

• There’s no guarantee that it will work, even with the best negotiation tactics. It may take a few attempts to get the lender to settle for less than the full balance, if at all.
• Some creditors may not be willing to work with you directly, and they may not be willing to meet you halfway.
• Keep track of who you spoke to and when. Also, keep a notebook by the phone when talking to them so you can make notes of the conversations with your creditors.
• A very experienced debt settlement law firm can get interest-free settlement terms making the resolution of your debts simply and easy for you and ensure that all of the proper paperwork is filed.
• If you have a hardship, such as a loss of job or medical issue, make sure to explain that to the creditor to let them know you have a good reason for not being able to pay back the debt.

6. Get Everything in Writing

Whatever debt settlement or debt reduction agreement you agree on, make sure you get it in writing along with a schedule of payments. Ask them for a validation of the debt and amount you owe in a letter. Be sure that you get a settlement letter mailed and emailed to you with the terms of anything you agree on before you make a payment on the settlement with your creditor. Here’s where a professional makes the difference since you could be pressured into agreeing to terms that are not in your best interest or not fully understand what you’re agreeing to with a creditor when negotiating with them on the debt you owe.

Having all of this information in writing will give you an advantage if the creditor changes its mind, decides later to come back and try to collect from you again or tries to take you to court for the full amount.

7. Don’t Miss Debt Settlement Payments

If you’re on a payment schedule instead of a lump-sum option, creditors will often include a provision that voids the settlement if you’re late on as little as one monthly payment. As such, it’s absolutely critical to pay your bill on time and in full. This will ensure that you pay off your debt on time and avoid having to pay the full original balance.

8. Check and Update Your Credit Reports

It’s always important to check your credit score and reports regularly, but that’s especially the case after you’ve finished paying off a settled debt.

It can take anywhere from 30 to 180 days for the zero balance to reflect on your credit report, so be sure to keep checking until the information is accurate — if it never updates, you can file a dispute with the credit bureaus. A good debt settlement firm will make sure you have what you need.

You can get a copy of each of your three credit reports (from Experian, Equifax, and TransUnion) through AnnualCreditReport.com. Normally, you’ll get free access to each report once every 12 months. However, the credit bureaus are currently offering weekly access for free through April 2021.

You can also get free access to view credit report items through Credit Karma and Experian.

The Bottom Line

Settling a debt with creditors can be frustrating, stressful and time-consuming. Also, if you’re not careful, you may end up with more debt than when you started and not be sure it was actually resolved properly.

While it’s possible to DIY the negotiation process, it’s always best to consult with a legal professional at a debt settlement law firm that concentrates on debt resolution, debt settlement, and debt relief to ensure you have the best representation for your matter to be properly resolved.

Attorneys who concentrate in this area know the law, know how to deal with your creditors, and know how to make sure your debts are settled properly. You can settle your debts on your own but keep in mind these tips from the experts from Tayne Law Group who go through this process every day, so debt settlement goes right, and you can get the settlements you deserve. Call us for a free consultation at 866-890-7337 or fill out our short contact form and we’ll get in touch!