Best Time To Negotiate With Creditors

April 13th, 2009

negotiateWith the current economic climate, it isn’t too far-fetched that you may be considering negotiating your arrangement with credit card issuers.  After all, you can usually foresee when the financial situation in the horizon isn’t too peachy.

So what should you do when the time has come and you’ve finally decided that the credit card balance may be a little too much to handle?  Should you renegotiate immediately with the lender?  Or should you wait till the private collection agency comes calling?

The answer actually depends on what you’re looking to get out of the deal and what you’re willing to give up.

When To Negotiate With The Issuer

If you want to keep your credit score from taking a nosedive, always negotiate with your credit card company first.  Be open about your situation and the kind of payments you can handle.  At worst, the negotiation will go sour and you’ll have to deal with a collection company later.  At best, you may be able to salvage a good part of your credit score, while paying considerably less interest on your outstanding balance.  Even better, negotiating with your credit card company might keep you in their good graces, allowing you to deal with them again later, when your finances are much more permitting.

When To Wait For The Collection Agency

Some people will tell you never to let your debt get to a collection agency.  I disagree.  While it will ruin your credit score (and you’ll need to rebuild again from the ground up), it’s the easiest way to pay a drastically reduced amount of your actual debt.  Since they acquired your debt for a very low price, collection agencies are willing to shave it down very low, as long as they can make a profit in the process.

noel Posted in Credit Card Guides

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