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Negotiating with Your Creditors Team
UpdatedApr 5, 2024
Key Takeaways:
  • Learn methods on how to negotiate with your creditors.
  • Read about important things to remember when negotiating accounts.
  • Hire a debt settlement company to negotiate the debts for you if you cannot do it yourself.

Can I negotiate a reduction in fees through a settlement?

My husband of four years has gotten himself into trouble with his credit cards that are in his name only. Chase and Capital One have added on numerous extra fees and driven his interest rate up so badly that even upon taking over his finances I could not come up with a way to satisfy these payments. I feel that these companies have taken advantage of his poor consumer habits, which I know that there are new laws in place because of. For example; the last Capital One statement I saw was roughly $310 in Feb, now they are saying that he owes $2,200. He now has a judgment filed against him from Capital One for almost $1,200 of which I would estimate $5,000-6,000 to be actual charges for which we do not deny. Is there any way out of the add on fees in way of a settlement? We do not have the cash to make the 80% that they said they might agree upon as of last month. Also, I have never merged any of my credit or bank accounts with his and his name is not on my mortgage or deed so I wonder how this will affect the outcome?

Generally speaking, a debt settlement offer provides a reduced a amount to be paid on the account. As you see in this case, the creditor is offering a reduction. This means they are willing to reduce some of the late fees and not demand the full amount owed. Unfortunately, the reduction offered seems to be one that is not necessarily affordable to your husband.

It is likely the case that the creditors cannot come after you. The debts are not yours and your assets are not co-mingled. However, I would encourage you to check with a licensed attorney in your state to find out whether your accounts are at risk. If you are in a community property state, make sure to discuss the implications of that with the attorney. Most attorneys will offer a free initial consultation.

Below, I will give you some tips on how to negotiate with these creditors.

How to Negotiate Your Debt

If you are interested in debt negotiation, you can either hire a debt negotiation service to represent you to your creditors, or you can contact them on your own. Follow these three tips if you want to try a do-it-yourself negotiation:

  1. Be calm, clear, and convincing. Explain your situation in unemotional, professional terms. Remember, they are not required to negotiate with you, so crying or screaming is not likely to move them to help you.
  2. Be persistent. If your creditor denies your request, explain to them why settling would be beneficial for them. Their priority is their bottom line and you must make it clear that the offer is in their best interest. If your request is still denied, do not agree to anything before you hang up the phone.
  3. Send a debt negotiation letter. The letter should be professional and clearly state your arguments. Send it by certified mail and keep copies of all your correspondence.

If you are not comfortable negotiating with your creditors or do not achieve a settlement, you can hire a debt settlement service. For a fee, they will negotiate for either a low lump-sum payment or a small number of monthly payments toward a reduced balance at a significantly reduced interest rate.

Although it might seem odd to pay a fee to save money, experienced debt negotiators will save you far more than the cost of their fee. They know which creditors are willing to negotiate and how much of a settlement they will accept. Due to their network of relationships, they often can settle debts you could not settle on your own. Also, a reputable debt settlement firm will forthrightly tell you if your case is to far advanced for it to effectively assist you.

Four Things to Remember When You Negotiate

Whether you negotiate on your own or hire a debt negotiation service, keep the following four thoughts in mind:

  1. The amount you can afford to pay. This should be a reasonable amount — often 40-60% of the total debt. Low-ball offers will be rejected immediately.
  2. Creditors are not required to negotiate. They often will, if the next option is bankruptcy, but do not expect them to make it easy for you.
  3. Negotiation is a process. When you negotiate, you make an offer and present your arguments. Expect them to make a counter-offer and counter-arguments.
  4. You are negotiating with a person. If you are friendly and professional, it is likely that they will be as well. Explain your situation in personal terms without becoming emotional. Listen to their arguments and answer them clearly. Your job is to convince them to see your side. Their job is to convince you to pay more. If you both play your roles properly, you have a good chance of reaching an agreeable settlement.

Negotiating debt is difficult and scary for most people, but it can be done. If you feel the task is beyond your abilities or if you do not succeed on your own, consider hiring a professional to do it for you. You can get help for your debt.

Learn about additional ways to get out of debt with our free debt help services guide.

I hope this information helps you Find, Save, and Learn.



Debt statistics

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Arizona, 27% have any kind of debt in collections and the median debt in collections is $1903. Medical debt is common and 12% have that in collections. The median medical debt in collections is $719.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.