25 Mar How We Negotiate with Creditors

Have you ever wondered how debt counsellors negotiate with creditors? This article takes a deep dive into the strategies we use and why. Debt counsellors are your secret weapon in negotiating with creditors and getting a handle on your debt. Learn our best-kept secret: the strategies debt counsellors use to fight for your financial well-being.

Understanding the Battlefield: The Creditor Landscape

Let’s explore different credit types (credit card companies, banks, etc.) and their negotiation strategies. Debt collectors come in all shapes and sizes, and their negotiation styles can vary greatly.

Credit Card Companies

Credit companies strategise to recover at least a portion of their lost money rather than risk losing the entire amount through bankruptcy. We can leverage this by highlighting your financial hardship and commitment. We could negotiate for:

• Lower interest rates: Reducing interest significantly increases the amount going towards the actual debt.
• Waived late fees: Eliminating these fees frees up additional funds for your monthly payment.
• Settlement agreements: Sometimes, creditors may agree to settle the debt for a lump sum payment significantly lower than the total owed.

In essence, we demonstrate your commitment to payment by negotiating for reduced amounts so payment is easier for you.

Banks

Banks generally take a more conservative approach to negotiation. This is why debt counsellors negotiate a loan modification that extends the repayment term or reduces the interest rate can make the monthly payment more manageable. Also, if the loan is secured with collateral (like a car), the counsellor will ensure you don’t risk repossession.

Government Debt (e.g., Student Loans, Back Taxes)

Government debt can be trickier to negotiate due to stricter regulations. To mitigate this, we explore options specific to government debt, such as:

• Income-driven repayment plans: These plans adjust your monthly payment based on your income, making them more affordable.
• Deferment or forbearance: In some cases, you might be eligible to postpone your loan payments due to hardship.
• Loan forgiveness programs: Certain government loan programs offer forgiveness after a specific period of qualifying payments.

Reducing government loans can be tricky, but with the correct strategies, there are ways to work around it.

Collection Agencies

Collection agencies strive to buy outstanding debt at a discount and aim to recoup as much money as possible. To combat this, True North Debt will:

• Validate the debt: Ensure the debt is accurate and belongs to you before any negotiation begins.
• Payment plan options: Negotiate a payment plan that fits your budget and ensures the collector stops harassing calls.
• Cease communication: Once a plan is established, the counsellor will ensure the collector stops contacting you directly.

Collection agencies want to recover as much of their purchased debt as possible for a profit.

Now that you understand what we negotiate for and why, you can go forth into the creditor landscape with eyes wide open. Chat to your debt counsellor about what strategies they plan to use if you’re confused. Contact us to get your Debt Review questions answered.