Proven Negotiation Tactics That Will Get Creditors to Agree with Repayment Arrangements

Tue, Oct 9, 2012

Financial Advice

Negotiating with creditors when you’re late on repayments can feel a lot like rolling the dice at a casino after you’ve already lost a bunch of bets and are trying to recover. However, you don’t necessarily need luck or professional negotiating skills to find a winning combination. With the right persuasive tactics and debt management knowledge almost anyone can get their creditors to grant leniency during times of financial hardship. Consider the following tips to increase your chances of success during debt negotiations:

Emphasize the Benefits of a Settlement

When you’re asking for a deadline extension or a restructured payment plan you don’t want to come across as a beggar. You need to emphasize that the solution you’re presenting is mutually beneficial – it not only helps you recover from debt, it also allows the creditor to recuperate without enlisting the services of a debt collection agency or undergoing a lengthy court procedure.

Assess Your Finances and Present a Viable Debt Management Plan

Analyze your budget and current expenses in order to determine a realistic amount that you’ll be able to repay on a monthly basis. It’s best to be completely transparent and honest with the creditor. Produce proof of income to show how much you make, and include an attached spreadsheet that broadly lists your current expenses. When speaking with a creditor over the phone it helps to be able to say “I’ve emailed you proof of my income and a detailed overview of my current expenses to show that I will be able to adhere to the arrangement I’m proposing.”

Start Making Progress with Repayments

Sometimes creditors are unwilling to even consider an adjusted repayment plan unless they’re confident the debtor will honor the terms of the arrangement. Sacrifice the funds needed to make a few payments before proposing an alternative solution and you’ll greatly increase your chances of receiving creditor compliance because it will be apparent you’re already making an effort to uphold your end of the bargain. Your request for a settlement becomes more appealing when you can say something like: “If I continue to contribute the same amount I’ve been repaying for the past two months the debt will be fully repaid within 12 months.”

Offer Additional Incentives

Add a perk to your debt settlement proposal by offering to increase the overall amount of interest you’ll pay in exchange for repayment flexibility. The creditor will be more likely to grant you the leniency to make lower repayments over a longer period of time if they know they stand to gain more from the situation. Although this will increase the total debt owed it will also give you the opportunity to avoid a badly damaged credit rating and keep your creditors satisfied while you gradually recover. Another way to provide an incentive during negotiations is to offer an initial downpayment to repay a fraction of the loan before establishing an arrangement.

Allan Keaney is an experienced finance writer and debt recovery specialist who enjoys helping others overcome the burden of financial difficulties. He has worked with a number of high-profile companies during his career, including TrustDeedScotland, one of the UK’s most renowned debt recovery firms.

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