Should I Negotiate with My Creditors before Debt Consolidation?
If you’re having trouble with your debt, then odds are good that you’ve tried several ways to get yourself out. If you have been struggling for a while, then you’ve no doubt read about people who have contacted their lenders and had their debt lowered. Does this method actually work, and does it make sense to try negotiating before you attempt debt consolidation?
The truth is that while you can’t really do any harm by trying to negotiate, you probably won’t get the results that many people on the internet claim they have received. Typically, credit card lenders have worked out how much money they think thy can make from you, and they are very rarely willing to work with you. While they might lower your interest rate a percentage point or two, they typically will not lower the total amount that you owe. In the case of hospital bills, however, negotiation might work better. Payday loan lenders typically have policies that do not allow their managers any leeway at all with rates and loan amounts. Hospitals are used to negotiating with people over their payments, and you can work with both your insurance company and the clinic to get rates lowered.
A better option for most people is to start the debt consolidation process and work with your debt counselor to negotiate with your creditors. Often, debt counselors have relationships with lenders that allow them to get better deals on your debt than you would be able to come up with on your own. Furthermore, the idea that the lender could receive a full payment of the loan is often a great bargaining chip. Many lenders are willing to accept a partial payment in exchange for not having to continue to service the loan and run the risk of the borrower defaulting.
Negotiating with your creditors is a long, time consuming process that almost always ends in frustration and few results. Lenders typically see very little to reduce a loan unless they can get some benefit from it. Rather than wasting your time, apply for a debt consolidation loan and let a financial professional handle it.