Debt Negotiation is all about strength and weakness.

It can be a stressful situation when the debt collectors keep calling and all you want to do the right thing for yourself but have no idea what that is or how to do it.  On the other side of the phone are trained debt negotiators looking to squeeze blood from your turnip.  With a well crafted understanding of their tactics you can stay in a powerful position.  Here are some key points to remember when you are trying for a fair debt negotiation.

Never give personal information, bank accounts or employment data.

Step 1: Pick up the phone when they call

Remember that courage we were talking about?  Well, this is the time to summon it, face your fears and start with a simple “Hello”.

Step 2: Be Polite

No one likes dealing with a jerk.  Unfortunately a lot of debt collectors are very jerky in the way they handle their clients. This is a classic intimidation maneuver that obviously works enough for them to continue to use it ad nauseum.  There are deadbeat clients out there that have no interest in working out their debts with their collectors and therefore the only approach that works is some sort of fear tactic.  “You catch more bees with honey”, ever heard that term?  If you start your conversation off on a positive note and keep that approach even while the debt negotiator is being jerky you will be surprised at how that can change whether or not the person on the other end wants to help you figure out an amicable solution or tie you to the train tracks.  Remember it is in everyone’s best interest to come up with a plan that makes sense.

Step 3: Find out the balance owed

Before you talk about anything related to coming up with a plan it is paramount that you know how much they think you owe.  How can you possibly talk strategy to pay off your debt if you don’t know what it is.  If it seems way off ask for a breakdown in writing so you can cross reference your statements.

Step 4:  Find out their best offer

Debt negotiation is simpler and more effective when you are asking the questions.  Now that you know what they say you owe and if you agree that sounds about right ask them what their best offer is.  It will typically be a payment plan or possibly a settlement amount that will cure the entire debt at one time.  You will have a lot more leverage if you have the ability to make a larger one time payment versus a monthly plan.  They would rather take less total money total now than take the risk of a payment plan that you may stop in the future.

Step 5: Written deal memo

After they have given your their “best” offer kindly ask them to get it to you in writing.  This establishes a clear record of what is on the table for consideration.  Debt negotiators talk to 100’s of people a day so they certainly won’t remember you  after their next 10 calls.  Let them know that you cannot consider paying a dime until you have a written deal memo explaining the proposed terms.

Step 6: Let the offer go

One of your strongest allies in debt negotiation is time.  The longer they don’t have your moeny the more they are willing to take less.  At the end of the day something is better than nothing.  Let your debt negotiator know that you are aware that although you are excited about resolving your debt with them that you must consider your entire financial picture as that is what got you in this challenge in the first place and that it will take a little time to see if their offer will make sense to  your economy.

Step 7: Follow up

You want to show your debt negotiator that you’ve turned a new leaf and are attempting to be responsible about your debt.  A good way to do this is to set up a follow up appointment and make sure you stick to it.

Step 8: Understand your ability to pay

Once you have their offer in writing look at your financial picture and if you have additional monies left over at the end of the month that would pay the monthly amount offered by the debt negotiator plus still have enough left over to cover surprise expenses than it may be time to commit.

Step 9:  Counter-Offer

If at the end of the day you see that you cannot pay their monthly amount or if you could there would be hardly any left over for unexpected expenses than counter offer with no more than half of what monies you have at the end of each month.

Step 10: Breakdown to Breakthrough

If negotiations breakdown it is not the end of the world.  You can try again in a month.  They may be more eager to come up with an agreeable offer or your financial scenario may have changed for the better.

Debt negotiation can be a mind struggle but with patience and polite assertion you can usually reach an agreement that is best for all.