Debt problems - How to negotiate reduced payments with creditors

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Credit Card Consolidation
Debt consolidation is a term you'll hear often in the adverts for loans - especially home loans. The idea is to take out a loan large enough to pay off your credit cards and other loans, then pay off the loan at a lower interest rate than you were paying on the credit cards. It's a logical leap - except for one thing. It works even better if you use the lowest interest rate loan available - 0% bal... Read debt consolidation 1 article



Debt and bill consolidation - Options for reducing debt
Excessive debt causes a lot of worry and anxiety - and for good reason. While some people are able to control their spending habits and maintain low consumer debt, other people find themselves caught in a financial trap. Credit card and consumer debt is on the rise. The average household in this country owes about $6,000 to $8,000 in credit cards - sometimes higher. Fortunately, individuals with h... Read debt consolidation 1 article



Debt problems - How to negotiate reduced payments with creditors
First, make a list of your creditors (NOTE: you should only attempt to re-negotiate payments on your UNSECURED debts if you wish to avoid the risk that an item upon which a debt is secured could be re-possessed)

Add to this list the outstanding balance owed to each creditor. It is essential that you are accurate with this balance. You should find the balance on the most recent statement from each creditor on your list. If you cannot find a balance figure, call the creditor or write and ask for a current outstanding balance. Only when you have an accurate outstanding balance for each creditor on your list can you proceed to the next step.

From your financial statement (prepared in the last of this series), subtract the total of your outgoings from the total of your income. The resulting figure is your disposable income.

You need to divide the disposable income figure amongst your list of creditors in proportion to the outstanding balance owed to each. This is why you need an accurate balance before you start. Otherwise, your creditors will not accept your proposal.

When you have done this, write a letter to each creditor quoting your name, address and account number, offering to pay the amount you have calculated for that creditor.

You will need to include a copy of your financial statement with each letter, and you will need a valid explanation for your hardship, which now prevents you from paying the full amount agreed initially.

It is not difficult to see that the success of your proposal will depend on how well you have put together your financial statement. The amounts you have claimed for each item of expenditure will need to be acceptable to your creditors. Unfortunately, there is no hard and fast rule I can give you for this. it is entirely dependent on the combination of your circumstances, which is unique for everybody.

If one or more of your creditors rejects your proposal, they will probably indicate why. It will then be necessary to re-jig your financial statement and re-send it to all creditors with a new letter. Certainly this can be time-consuming and tedious but there is no easy answer to this.

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Debt problems - How to get interest on your debts frozen

The first thing to understand is that there is categorically no guaranteed way to get interest frozen.

Each of your creditors has the right to refuse any change in the details you initially agreed.

Therefore, all you can do is ask. Given that this is the case, it follows that your success depends entirely on what and how you ask. It will also be considerably influenced by how you have presented your case generally in the other steps in this series, and by the relationship you have with each creditor.

In the first in this series, on how to deal with your creditors, you will remember that we pointed out that you are not actually dealing directly with ABC Finance, or XZY Credit Card, you are dealing directly with another human being who is representing the entity which is your creditor.

Any request to freeze interest should logically accompany your proposal to reduce payments.

You will need to compose your own request, in order to fit in with your other material, but here are some pointers.

Remember that your letter with its request to freeze interest will be dealt with by a human being. Make sure that your letter "talks" to that person nicely.

Present a good reason why that person should consider your request.

It might help to point out that, bearing in mind these reduced payments are all you can afford, it would be helpful if all of each payment could be applied to the capital outstanding.

If interest continues to be added, with reduced payments, your debt will take a long time to clear. Point out that you are keen to clear the debt as soon as possible.




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