subject: How to Negotiate Debt Obligations With Creditors? [print this page] What is debt? Debt is simply put as something owed. It is a purchase a person takes or performs in even before the purchasing capabilities have been earned. In other words, buying something even before one has the means to buy it. In order to provide a better life for loved ones or for themselves, most people go into debt to attain that -- whether it is getting a better car, better house, buying that most coveted outfit or getting that good education. Of course, the debt would not have been completed if there is no creditor who agrees to lend the money for one to make the purchase. This agreement between the creditor and the debtor is called a Debt Obligation.
Nowadays, most or all debts have agreed timeframes of payment and interest. As appealing as the idea of getting that better sense of living might be, sudden drawbacks might occur over the time when the debtor is supposed to pay the creditor, but failed to pay the payments due on time or pay them in full. When this happens, the creditors might have to report the delinquency to the credit bureau, causing a negative effect on the debtor's credit standing. This might affect the debtor's chances of applying or obtaining line of credit or loans in the future.
What if the debtor is willing to pay but just not in full at this particular time? How can he negotiate debt obligations with creditors? First of all, the debtor needs to prepare his case and present it to the creditor. Have a good sit-down talk with the creditor and enlighten them with his current financial situation and obligations.
If possible, the debtor can create a spending budget plan to really illustrate to the creditor his financial status and also to understand his own debt. It is also very important that the debtor propose a solid payment plan that he can fulfill realistically.
As debt was initially made because the debtor wanted more than what can be afforded, negotiating debt has to be realistic. The creditor might also need to be reminded of the good credit history that the debtor has had over the past and that he has been a good and loyal customer by making previous payments on time.
If needed, as some creditors might not have the full power to eliminate negative items on the debtor's credit report, speak to a supervisor. The debtor must try to negotiate with the creditors and not with the collection agency.
Make sure to present the negotiation in a good light that will make the creditors see that both parties will be on the winning end. Always be polite and not come off as being rude or better than them.
The key to a successful debt negotiation with creditors is perseverance. If the creditors did not side on your case, give them some time to mull it over and present them with your case again.
