Negotiating with the “Enemy”



Many consumers don’t realise it, but the information provided to a credit agency from a creditor is completely the decision of that creditor. For example, a creditor is under no obligation to report either positive or negative information. This means you have the potential to negotiate with creditors in terms of the information they give to credit agencies. So make sure when applying for a loan in Australia you read carefully the Privacy Policy section.

Many consumers don’t understand this concept, and rather than working with creditors to create manageable payments, instead opt to make no payments at all. It’s not like casino gambling, this needs to be planned very carefully.

The first step to successful negotiation is to always take calls from creditors. When their calls are ignored, they’re likely going to assume you’re not going to pay your debts, and they may pursue further action. By maintaining communication, you can send the signal that you’re willing to pay, which will make them more receptive to negotiation in many circumstances.

When you begin the negotiation process, it’s also important to know how much you’re going to be able to realistically pay. Create a budget before attempting to negotiate, so that you don’t overextend yourself in the process. Knowing what you can afford will give you a good starting point to work with creditors.

Don’t go into the negotiation process thinking anything is going to be unacceptable. Many creditors just want some form of payment, so this may end up being only 50 or 70 percent of the original debt, and this can often be paid through either a lump sum or a payment plan.

It’s also important to understand exactly what a creditor is saying, and get all agreements in writing. Many creditors will try to intimidate the consumer with legal jargon, or create unreasonable payment plans, so combat this by taking the time to listen and comprehend what’s being offered, and then, once an agreement is reached, asked for all the details in written documentation.

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