Debt negotiation is a powerful tool to offload all or a portion of the debt you owe. Despite several efforts, debt negotiation makes a lot of sense if you fail to repay your debt. Depending on the type of debt, you can negotiate to lower the EMI, restructure the loan, or waive some principle or full interest.
However, the whole process is intimidating and requires full awareness of the situation. In this article, we share some tips to help you smoothly sail through the debt negotiation process.
Before starting any conversation, assess your debts. Then, do some math to know how much you afford to spare after subtracting your essential needs. Also, how much time do you need to pay off the debt with or without the debt settlement process? This self-analysis is vital as a result; it would determine how hard you have to project your problem.
The next step entails understanding your lender. Before coming to the negotiation table, do some online or offline research about your creditor. Also, go through their lending policy, penalty, and any other specific information about debt repayment failure. You can also call their helpline number to learn about their debt settlement procedure. Unfortunately, not every lender agrees to a debt negotiation easily.
Creditors field their best experts to counter your claims during negotiation. Moreover, understanding legal jargon and reading the fine print needs specialization. So, unless you are a finance or legal expert, it is advisable to hire a debt negotiator for the best results.
Hiring the best Credit Mediation debt negotiation service takes the emotion and stress out of the situation. These experts also know the various ins and outs of the finance sector, so chances of securing a better deal become higher.
If everything goes in your favor, lenders may agree to forgo 40% to 50% of the debt you owe. Still, you must arrange to pay the remaining amount in a lump sum or through small payments over time. However, offer a lump sum payment if you want to settle the debt on the spot.
Considering your situation, lenders will not take the further risk of delaying the repayments. Moreover, you may get an outright discount if you offer a lump sum. Therefore, come up with some cash to close the deal.
Whether you hire a professional or not, you should be able to justify your stance in front of lenders. For instance, your bank account and credit card statement should reflect your hardship. All these efforts ensure you get a favorable decision. On the other hand, your negotiation is likely to be rejected if your credit card statement reflects trips to luxurious restaurants and large shopping amounts.
Do not delay the negotiation process as soon as you realize your inability to pay off debt. Unfortunately, some debtors wait until the last moment to initiate the negotiation process. As a result, late fees pile up over time, and overlooking overdue notices might go against you in the future.
The best practice is to contact your lender directly and inform them about your financial hardship. Similarly, it is essential to contact the creditor in time, as your debt gets transferred to a debt collector after some time. If this happens, it becomes challenging to mediate with debt collectors.
Last but not least, know your rights while negotiating debt with your lender. In case your negotiation fails, you should be fully aware of the next steps. In Australia, debt collectors can not use physical force, coercion, and harassment as a tool to collect the debt. At all times, creditors should treat debtors fairly, respectfully, and courteously.
As evident, you can take a multidimensional approach to negotiate your debts with the lender. However, if your debt is unmanageable, it is advisable to contact a financial advisor or hire a debt negotiator. These professionals are experienced in handling bad debts and can help you in making the decision in your favor.
Further, after the negotiation, practice good financial habits to avoid getting into the same situation in the future.