Dealing with debt can be really stressful. If you’ve fallen behind on payments or are struggling to keep up with minimums, negotiating with creditors could help provide some relief. The key is learning how to approach these conversations strategically to get the best possible terms.
Before reaching out to creditors, take some time to understand the debt restructuring options available. This will allow you to go into talks informed and prepared. Some things to research:
Document key details for each credit account into a spreadsheet. This will help identify priorities and negotiate specifics during calls.
When first reaching out, take an empathetic tone acknowledging the difficulties COVID has caused. Many creditors have hardship teams dedicated to assisting borrowers impacted by job loss, illness, etc.
Some sample opening lines:
Position the call as seeking assistance versus demanding forgiveness. This builds goodwill and makes creditors more likely to offer support.
After opening the call empathetically, clearly explain your current financial situation. Provide specifics on job loss, medical bills, etc. that contribute to financial hardship.
Some details to cover:
The more context you can provide, the better creditors can assess need and eligibility for hardship programs. Submitting documentation upfront also helps support the request.
Before requesting a specific solution, listen and take notes on all debt restructuring options presented. Available programs vary significantly between creditors.
Some potential options include:
Let the creditor walk through different assistance programs, eligibility criteria, durations, etc. Understanding all alternatives allows you to evaluate and select the optimal debt relief solution.
Once the creditor has outlined available debt restructuring options, request your preferred solution. Clearly explain desired specifics like:
Citing financial hardship due to COVID often provides justification for better-than-standard terms. The worst they can do is say no or present an alternative agreement.
Before agreeing to new debt repayment terms, request a written agreement outlining all details. This includes:
Review this documentation carefully before signing. Get clarification on any vague language. You want no surprises down the road.
If additional financial challenges occur during the special debt arrangement, contact creditors quickly to discuss impacts. Demonstrating proactive communication makes creditors more likely to extend assistance programs if hardship continues longer than expected.
Avvo, LawInfo, and FindLaw provide overviews on bankruptcy alternatives like debt management plans and debt settlement. If negotiating directly with creditors proves unsuccessful, meet with financial experts to evaluate supplemental debt relief solutions.
The most important thing is taking that first step to discuss your financial situation openly and honestly with creditors. This puts you in the best position to obtain temporary arrangements providing critical breathing room. With a little effort and empathy on both sides, significant progress can be made.
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