Bankruptcy is a last resort when you cannot pay your bills. Work with whomever you owe money, creditors and collectors, to negotiate options for paying your debt. If you have lost your job, are ill or have other circumstances that prevent you from paying your debt, you can negotiate with creditors to settle, defer or come up with a payment plan for your debts. Debt negotiation takes preparation, a calm demeanor, firmness and persuasiveness.
Do your homework before calling creditors. Creditors will probably call you first, so be prepared for their call. Know exactly how much you owe and your monthly budget. And research debt negotiation options before speaking with creditors. Decide what you want to offer and what you would accept before the call. Creditors or collectors will start with options that work best for them, not you. Be prepared to counteroffer with a plan you can live with.
Remain Positive and Calm
Talking about your finances is often frustrating, emotional and upsetting. Becoming hostile with creditors will get you nowhere. Many call centers have policies that allow representatives to disconnect or transfer a hostile or abusive caller. By remaining positive and calm, you are in control of the conversation. A calm demeanor allows you to get a handle on guiding the debt-negotiating discussion where you want it go.
Creditors may offer you a range of options to manage your debt. Listen to their options and counter offer in conjunction with your bottom line. Creditors may not immediately agree to your proposal. Negotiations may go back and forth during several calls. Remain firm with your offer and end each call when they do not meet your suggestion. Present a realistic offer, but remember -- creditors would prefer some payment rather than none.
During debt negotiation, explain to creditors why you cannot pay your debt as scheduled. Do not share too much information about your income and savings; just explain your lack of income. Disclose the reason you're unable to pay your bills, which might be a job loss or illness that left you with debt. Persuade the creditor to see things from your viewpoint and to collaborate with you on a plan to pay your debt.