Why negotiate?
If you are in financial trouble but you honestly want to do the best you can to pay off your debts, you may be able to negotiate with your creditors. In order to avoid the collections process, many creditors will reduce payments, extend your repayment period, waive late fees, or sometimes even accept less than full repayment. If you can negotiate your repayment terms, you may be able to get through your financial crisis without ruining your credit record.
Notify creditors of trouble as soon as possible
One of the keys to successful negotiations is to let your creditors know about potential problems as soon as possible. Explain the situation to them (e.g., job layoff, medical emergency). Let the creditor know what you're doing to remedy the problem (e.g., looking for work, cutting costs at home). Specify whether you need a temporary fix or long-term relief, and continue to send at least minimal payments as a sign of your good faith effort.
Don't expect perfect results
Unfortunately, many creditors refuse to negotiate with debtors. You may find that some of your creditors are not willing to accept partial payments or to extend your loan term. But it is still in your best interest to make an effort to negotiate.
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