In case you don’t know, the whole idea of moneylenders and creditors giving feedback on a monthly basis to the credit bureau agencies is plainly voluntary. This implies that any info added to your credit report by moneylenders or creditors can be modified or removed to lessen the negativity on your credit report; if you can convince the lender/creditor to take this action.
There are wide ranges of option when negotiating with your lender. They may be willing to defer one or multiple payments, decrease your monthly payment, waive late fees and penalties, and restructure your loan plan in a way that makes it easier for you to pay off, or reduce your interest rate.
You might be able to secure a long-term payment plan that you can afford to pay monthly, or settle the debt for up to 50% or less. This is solely dependent on how well you’re able to negotiate with your creditor, your current situation, and your ability to pay off the debt at once or in multiple payments.
An alternative plan is offering a settlement offer to the lender in the form of the IVA. Debt settlement is a legally binding document that lets you renegotiate the amount owed. Most times, this will halt late fees, interest rates, and other fees that may accrue as you pay off your debt.
Normally, if you’re negotiating to settle a debt for an amount lesser than what is originally owed, the creditor will demand you pay the whole agreed amount in full or in two installments. You tend to save a lot of money if you can make a lump payment.
However, you can also negotiate for a long-term payment schedule if you apply for an IVA, as it allows you to pay a very low monthly fee, while also presenting you with the possibility of writing off a part of your debt in the end.
When negotiating with a lender, creditor, or collection agency, your main goal is to convince them to send a report to credit bureaus; listing your account as “Current,” “paid as Agreed,” or “Account closed – Paid as Agreed”.
Anything other than the above listed, such as “Paid – Charge off,” “Paid,” “Repossession,” and “Settled” will have a negative impact on your credit rating. You must exhibit willingness to negotiate and demonstrate a good faith with proper follow-up so you can achieve your objective.
Well, to be realistic, you have to settle for a report that’s a little less positive to the credit bureau.
Some lenders will agree to alter your account status when reporting it to credit agencies, but that may be quite easy for you if you agree to pay up to 70% of the original amount due, and you meet the full requirements of the settlement without any further delays.
The decision to negotiate with a consumer is situational, and depends on the ability of the debtor to negotiate with the lender, creditor, or collection agency. It’s not a conventional policy for a lender or creditor to delete negative info from a customer’s credit report just because they have cleared their debt after it’s has been labeled “late”.
These tips will help you negotiate with a collection agency, lender, or creditor:
• If your request is denied for whatsoever reason, ask to speak with a supervisor.
• Don’t agree to pay more than what you can comfortably afford. Know what your financial situation is, and work within those confines while negotiating.
• During the process of negotiating with the creditors, or lenders, try to figure out what settlement the lender/creditor is willing to accept. Offering to pay between 50% and 70% of what’s being owed, either as lump payment or multiple payments isn’t reasonable.
• Don’t be intimidated by the person you’re in negotiation with, even if they threaten you with lawsuits.
• Bear in mind that successful negotiations don’t just happen overnight. They take weeks because it comes with several rounds of offers, and counteroffers.
• You have higher leverage in the negotiation if you can afford to settle a debt with a lump payment rather than a stretched payment plan.
• The person you’re negotiating with is a trained and experienced professional when it comes to collection of debts. It is normal for them to use legal terms in writing or during conversation. They use this tactic in confusing or intimidating customers. You have to listen carefully to what is being said at the time, and ensure you understand what you’re committing yourself to. If need be, consult with a credit counselor or lawyer if you need further clarifications on anything regarding your debt settlement and/or negotiation.
• Ensure everything you agree to is put in wiring, dated and signed by both parties.