Debt management strategies come in all shapes and sizes, but not every solution is a good fit.
There are many things to consider when choosing a debt management strategy.
However, it never hurts to start at credit negotiations.
Negotiating debts with creditors is not as difficult as one would think, but it does take some skills and persistence.
There are a few basic guidelines of debt negotiation that can boost the chances of successfully lower debt payments and avoiding further default.
The Do's Anyone who is experiencing overwhelming debt knows that hassle of dealing with creditors.
While it may seem intimidating to negotiate with a creditor, it is by far impossible.
The best place to start is by organizing your finances before you contact them.
Sit down and take a look at your debts and income to determine how much you can realistically afford to repay each month.
If you don't already have one, create a budget.
This will help you allocate your monthly income to each of your expenses each month.
Your debts should be considered an essential expense and prioritized in terms of payment.
Once you have an idea of how much you can pay each creditor, make contact with them.
It is best to negotiate over the phone as you may be able to secure a deal that day.
It is also important that you attempt to contact your creditor before you miss a payment.
Creditors are more willing to negotiate when they can see you have taken the initiative to resolve your debts before missing a payment.
If you have already missed a payment, contact your creditor right away.
When talking with your creditor give them an idea of your financial situation.
Creditors have the right to know how you ended up in a debt you can't afford to repay and why your income isn't sufficient to repay your debts.
You do not have to be too personal, but give them enough information to paint an adequate picture.
Remember the goal: you are trying to demonstrate your financial hardship but also show them you have enough to maintain a modified payment arrangement.
This is a very fine line.
The Don'ts One of the worst things you can do before negotiating with creditors is accumulating more debt.
Running up charges within 60 to 90 days of negotiating may seem suspicious to most creditors and is sometimes considered fraud in bankruptcy filings.
Your creditor is aware of your purchase and payment history, so when finances become tight it is best to stop spending.
Try to keep your purchases minimal and take a break from buying before you attempt to negotiate your debts.
Another problem in credit negotiations is your approach.
While some may advise you to threaten bankruptcy or act stubbornly, you will find that this generally does not lead to good results.
Never threaten your creditor or use abusive language in your negotiations.
Remember that the person you are speaking to is only one person and you have the right ask to speak to a supervisor or someone else in the company if you aren't happy.