How to Negotiate With Creditors Before Bankruptcy
- 1). Compile a list of your creditors, starting with the highest balances. List the name, what you owe and the applicable interest rate.
- 2). Create a monthly budget. Begin with debts that you will not or cannot negotiate, such as your mortgage or car payment. Allot a reasonable amount of money to living expenses and emergencies. Evaluate what is left to determine your negotiating position with your creditors.
- 3). Call each individual creditor. Start with the lower balances, as they will be the easiest to pay off if your negotiations are successful. Ask to speak to a manager or someone who has decision-making authority. The customer service representative who initially answers will not be able to negotiate terms.
- 4). Speak to the manager. Explain your situation clearly and succinctly. Don't embellish to try to generate sympathy. Tell him why you became delinquent, detail your efforts to remain current and indicate that your situation is heading toward bankruptcy.
- 5). Offer a realistic settlement figure. Suggest a payment below the figure you can realistically make. If the creditor agrees, you will have some breathing room. If the creditor counters with a higher number, you can raise your offer to continue negotiation.
- 6). Request an interest-rate reduction if the creditor balks at a lesser amount. A reduced interest rate can lower your monthly payment.
- 7). Request the new repayment terms in writing once agreed upon.
- 8). Make your new payment as agreed each month. Failing to make the negotiated payments can leave you with no other option than bankruptcy.
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