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Dealing with Creditors

To help you create your own strategies for economic recovery, master your one-on-one tactics in dealing with a lender or creditor.

John McKindles

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Other than the paramount variable of whether the debt is secured or unsecured, your approach to any creditor should be consistent with all creditors. This does not mean that each creditor will achieve the same “deal”; rather, it means that you will approach each creditor similarly.

Deal with a Decision Maker

Your first priority is to ensure that the lender representative with whom you are communicating has the authority to make a decision.

Normally, your first contact will be with a collection person who has no decision-making authority. Their job description is short and simple: to get money from you. Before wasting any time and effort in this initial exchange, ask them this question: “Do you have authority to modify the terms of the debt?” Emphasize that you are suggesting not a solitary late payment but a permanent modification. You will invariably hear, after some initial attempt at misdirection, a negative response.

At this point, simply ask to be directed to someone who has decision-making authority. Remember to remain considerate and congenial throughout your exchanges. The nice ones will appreciate that you realize it’s just their job (the jerks will be aggravated that they cannot push your buttons).

Keep Your Financial Details to Yourself

Second, when you get through to the decision-maker, never, ever, give them any specific financial information or documentation. You can explain very generally that circumstances – e.g., job loss, family issues, health issues, pay reduction – have compelled you to seek modified terms,. Be no more detailed than that; they will only try to use detailed information to argue against modification or to gain leverage in their collection efforts.

You do not have to convince them that you need adjustment; that is your decision.

Name Your Terms

Your third priority is to clearly communicate specific modification terms that you require. While this can be a low-ball proposal en route to a higher negotiated resolution, my preference is to dispense with this archaic negotiation style; it wastes time, increases friction and relegates you to justifying your position.

Clearly state your terms and quickly obtain an address – postal or e-mail – to which you can send your required terms in writing. Memorialize proposals, conversations and agreements in writing. If it is not in writing, it never happened.

Remember that You Are in Control

Finally, always bear in mind that you – not the creditor – control the negotiations. This is not just an empowering perspective; it accurately reflects the true negotiating positions.

The creditor needs you (or, more accurately, your money); you do not need the creditor. The last thing your creditor wants is another non-performing loan or debt, and this is particularly true in this time of rampant defaults and red ink.

Hold to your position

As long as you have previously and properly protected your assets, you will be prepared to cope if the creditor rejects your efforts and recklessly pursues collection against you. You will be prepared for that eventuality, and you will know that you tried your best to work a viable alternative.