Negotiating With Creditors

When it comes to negotiating with creditors, debtors should bear one thing in mind: you can catch more flies with honey than vinegar! Creditors are more likely to work with debtors who are cooperative and demonstrate an acceptable level of respect, rather than those who are belligerent and insist on denying responsibility for monies owed. After all, it does debtors no good to try to war against the man or woman who holds the future of their creditworthiness in hand. There is no need to bow and scrape in a disingenuous display of humility; but by being polite, considerate and compliant, debtors may win the heart of the lender and a little more time to catch up on delinquent payments. Creditors face the same financial problems that debtors deal with: they are consumers who must make mortgage and car payments in addition to running a business. Entrepreneurs have money invested in inventory, employees, and overhead; and when customers fail to make timely payments, that failure wreaks havoc with the owner's livelihood. In order to keep businesses solvent, creditors rely on customers to uphold their end of the installment buyer's agreement, which is a promise to pay on time.

No matter how long payment is delayed, delinquent bills don't simply vanish away, and the best recourse is to face indebtedness head on. Debtors should call lenders the moment it becomes apparent that payment cannot be made. Most account issuers are well aware of the problems consumers may face in making ends meet; and most lenders appreciate debtors who propose alternative payment arrangements. Making even a partial payment on a consistent basis proves to lenders that debtors are sincere about upholding financial obligations. When negotiating with creditors, debtors should try to suggest arrangements that are reasonable and within budget. Making unrealistic promises for payment simply doesn't work. It is better to offer to pay amounts that can be easily managed, rather than fail to keep unrealistic arrangements that wreak havoc with the household budget.

Debt collectors are only human and trying to collect money can be a thankless job. Collectors have to deal with angry and belligerent debtors who have no intention of repaying monies, and many agents are used to having to put up a fight to resolve delinquent debts. Sometimes creditors and debt collectors may feel that using strong-arm tactics are more effective than patiently and calmly addressing debtors about past due accounts. The end result may very well be a shouting match between two angry individuals with no money exchanged and a pending lawsuit or court-ordered judgment against the debtor. When negotiating with creditors who are irate and out of sorts, it's best to offer to call back at a time when tempers are less out of control. The Bible says that a soft answer is always the best response to anger. "A soft answer turneth away wrath: but grievous words stir up anger" (Proverbs 15:1).

When negotiating with creditors who are angry, debtors should simply speak quietly, reassuring the collector that the call or correspondence is merely a sincere attempt to try to resolve the delinquent account. Once anger has subsided, the debtor can restate their intention to make restitution without causing the creditor or collector any further undue distress. It is always a good idea to "Agree with thine adversary quickly, whiles thou art in the way with him; lest at any time the adversary deliver thee to the judge, and the judge deliver thee to the officer, and thou be cast into prison. Verily I say unto thee, Thou shalt by no means come out thence, till thou hast paid the uttermost farthing" (Matthew 5:25-26). Unless account records are in error, debtors don't need to antagonize collectors or try to disown the debt, but simply acknowledge that monies are owed and strive to make amends in compliance with creditor demands. Negotiating with creditors requires giving and taking on the part of both parties; and nothing can be resolved when either party insists on man-handling the other.

In the case of unsecured debts, or those in which no collateral is involved, debtors may offer to give creditors something of value to hold until the past due account is paid in full. The collateral is more of a guarantee of a promise to repay than empty and insincere promises. Debtors who are willing to make these kinds of concessions as part of negotiating with creditors may stand a better chance of reaching favorable terms. Debtors may also suggest making weekly rather than monthly payments in order to restore creditor confidence and clear up past due accounts. By breaking larger monthly amounts into smaller, more manageable payments each week, the debt can be reduced more quickly. Rent-to-own companies have long employed the pay-by-the-week policy to ensure that customers can manage a long-term lease agreement without default. Lenders may also accept debtor offers to take out an allotment from each paycheck in order to guarantee payment and demonstrate a willingness to honor obligations.

Once an agreeable repayment arrangement has been made, debtors should do everything possible to honor those commitments. Lenders and collectors will be happy to work with debtors who faithfully and consistently strive to clear up past due accounts and restore creditworthiness. A debtor's financial future and lending power rests on positive negotiating with creditors. Lenders who have a positive experience with delinquent debtors who honor obligations and are consistent in trying to resolve accounts can become a debtor's best advocate. Even if delinquent accounts get posted to consumer credit reports, lenders who have worked to help debtors resolve past issues will more than likely be willing to vouch for borrowers seeking future financing. Debtors faced with the formidable task of negotiating with creditors should always devise a reasonable repayment plan; contact the creditor and apprise them of a sincere intention to resolve the debt; and communicate respectfully with collection agents and creditors to ensure a more positive outcome and good prospects for borrowing in the future.