When working with financial creditors each month you may have some options that will allow you to feel more in control of paying your money back. You may be able to work with your creditors to reduce the amount of money you owe or be allowed more time to pay back the money you've borrowed.
Before negotiating
Before starting negotiations with your creditors, take a look at your financial situation and your debts. You'll want to know exactly how much money you can afford to pay each month to reduce your debt before you begin talking with your creditors.
To do this, create a household budget. Determine how much money comes into your household each month. Then total the amount of money you spend on expenses each month. This can include mortgage payments, utility bills, groceries, car payments, insurance, and other items that you must pay each month.
Once you compare your monthly debt obligations to your monthly income, you'll see how much you have left over. Then, decide how much of this money you can dedicate to paying back your creditors.
What to negotiate
Once you are ready to talk with your creditors, you can ask for a variety of options to help you repay your debt.
For instance, you might be able to negotiate a lower interest rate with your credit card company - something that will reduce the amount of money you pay them each month. You may also be able to negotiate new terms with the lender who provided you with your car loan, perhaps persuading the lender to extend your payback period, lowering your monthly payments in the process. Maybe a creditor would be willing to allow you to skip one or two payments without penalty to help you catch up on what you owe.
You might even be able to negotiate bigger-impact solutions. Lenders might agree to a settlement that would allow you to pay a percentage of what you owe them. Others might decide to set up a repayment plan that allows you to pay what you owe over a timeframe that works for you and without any added interest or fees.
Tips
Be patient, negotiations can last for weeks and include several rounds of offers and counter-offers.
Remember what you can afford to pay back each month. Only agree to a settlement that allows you to pay what you can afford each month.