One of the options you have when you can’t pay an outstanding debt is to renegotiate the terms of your agreement directly with your creditor.
You might choose to do this before the account goes to collections so that the incident doesn’t go on your credit report and negatively affects your credit rating.
Some creditors are willing to renegotiate the terms of the agreement when they feel confident that you will, in fact, pay off the amount owed as quickly as possible.
Remember that creditors have to pay a collection agency a fee in order to collect on your account, and it is actually much easier for the creditor to come to an agreement with the borrower and close out the account.
Unfortunately, some creditors will refuse to renegotiate and will insist that you either pay your debt in full, or your account will handed over to a collections agency.
Here’s what you can do if a creditor refuses to renegotiate the terms of your agreement.
Send a letter stating your terms clearly
Be very specific about how much you can pay, and when you will be able to pay it. Write a thorough and professional letter that states your request, and give the creditor a time frame to respond.
Be as direct and professional as possible about the offer so that they know exactly what to expect. Give them an offer that they can’t resist , emphasizing the fact that you can pay the new amount in full at a proposed date.
Some creditors may be more likely to renegotiate when they have a formal confirmation of the specific dollar amount and date it will be paid by in their hands.
If you don’t hear back from the creditor after sending your letter with the proposed settlement, don’t be afraid to follow up with another letter or a phone call.
Do everything possible to let them know you’re serious about your offer and are ready to close out your account by a specific date. The creditor can either: ignore your request, agree to the offer, or send back a more acceptable offer. The key is to keep the communication going so that you have a chance at negotiating.
Work with a debt settlement agency
Legitimate debt settlement companies may be able to negotiate with a creditor on your behalf, but it can be tricky to find a company or consultant you can trust.
Credit counselors will get paid by the creditor as well as from the client. Do your homework to find a debt settlement agency that can help you negotiate better terms with your creditor if the balance is high enough to justify the cost.