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The short answer is, “Yes. Yes you can negotiate your own debt reduction.”  The problem with negotiating your own debt reduction directly with your lenders is that some lenders may simply refuse to negotiate with you directly (there is no law that requires them to do so) and because you do not negotiate debt reduction for a living, you may not know how much reduction you can actually ask for. Additionally, you simply may not know the proper language to use when making your request.

In some ways this question is analogous to why a big name movie star needs an agent to negotiate a deal. An agent simply knows the ins and outs of negotiating more thoroughly and an agent who negotiates for a living knows what is possible at any given moment and what isn’t.

And finally, there’s the matter of emotions. When you negotiate your debt reduction yourself you are emotionally involved in what is – to the credit card company – an emotionless and straightforward business transaction. It is the emotional aspect of debt reduction negotiating that causes some lenders to refuse to negotiate directly with the debtor in the first place.

How Do You Begin?

The first thing you need to do is to assemble your financial details. How much income are you generating and how much do you need for general living expenses, including mortgage or rent payments, food, utilities, medical costs and the cost of getting to and from work? This is similar to the information you would be required to put together if you were declaring a Chapter 13 bankruptcy.

Once you know how much money you have each month for your credit card and other such payments, it is primarily a matter of presenting this information to each creditor, telling them what you are able to pay and giving them an indication of how long you expect your current situation to last.

Negotiating Involves Give and Take

Your lender may or may not accept your first offer. Your lender may assume (rightly or wrongly) that you can afford to pay more than you are admitting. Your lender may come back with a counter offer, or your lender may demand that you abide by the terms of your original agreement. This is where a cool, unemotional response is necessary.

You must determine if there is room to make a counter proposal – or, indeed, if you even have the resources to make a counter proposal at all.  Your counter proposal of last resort should be bankruptcy. Most lenders do not want you to declare bankruptcy and may decide on some form of negotiation if that appears to be your only other reasonable alternative.

Get It In Writing

Any deal you strike with your lender must be clear and easily understood. It also must be in writing. If possible you should make the proposal in plain, clear, non-legalese language. Write out your proposal, make two copies, sign and date both and request that your lender sign and date one copy and return it to you.

Don’t be surprised if your lender requires that your proposal be rewritten by their legal department. If that is the case, read over their proposal carefully as there could be subtle but substantial changes in their offer even after they have agreed in principle to your terms.

If possible, have a lawyer look over any proposal the creditor makes with an eye towards explaining anything that is in the least bit unclear or otherwise ambiguous.

TSC Sources & Recommended Resources

• Do It Yourself Debt Settlement
• Debt Settlement Kit (fee)
• The Pros and Cons of Doing Your Own Debt Settlement

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