If your find yourself in the difficult position of negotiating a debt settlement, be sure you check with your financial advisor and thoroughly research all your options first. If you believe you’re in over your head, a compromise can be the first step towards better times in your financial life. Creditors aren’t likely to simply offer an easy way out, but through negotiations you may be able to cut a deal that helps put your past behind you.

 

Choose Your Amount

Don’t set yourself up to fail by offering more than you can comfortably afford. Promising more than you can pay might temporarily stave off your creditors, but once you stop making sufficient payments you may find yourself facing a lawsuit, and potentially, bankruptcy court. By starting your negotiation with an amount that you know you can pay, you’re more likely to reach a settlement that doesn’t fall through and end up causing even more financial damage.

 

Although creditors generally want the full amount of the debt you owe, they might be more willing to work with you if you’re truly struggling just making the minimum payments. While your cash on hand might not be enough to appease your creditors, a payment plan in which both parties compromise might have a greater chance of success.

 

Be Flexible

For example, instead of making a lump-sum payment, you might offer your creditors a one-year payment plan, during which time interest is suspended. If your creditors would rather get as much as they can as fast as they can, consider offering a certain percentage of your debt, such as 50 percent of the amount owed, as a one-time lump-sum payment.

 

As with most negotiations, there might be a little tug-of-war involved. Start by offering your creditors a low amount that you’re confident you can pay and await their reply. Be patient. While they may not accept your offer right away, you can try to renegotiate at a later time.

 

Understand the Repercussions