You Are Negotiating Your Debt Wrong! Mistakes Commonly Made By Consumers

 Why is debt negotiation so important to credit repair?

Debt negotiation can be a trying process and one that not many people look forward to. Still, it is a necessary part of the credit repair process and if you want to put an end to the creditors calling you at all hours of the day, debt negotiation is a must!

There are many ways to go about debt negotiation and resolve the amount of debt you carry and knowing how to negotiate your debt properly will lead to the most success and the least amount of debt carried. Be forewarned that making a wrong move during the debt negotiation process will lead to even more headaches than before and possibly more penalties on your debt load.

Understanding your debt is the first step to being able leaving debt behindto negotiate it properly. Rather than give you tactics that might work for some people but not others, we are going to tell you about the areas to avoid making mistakes in during the debt negotiation process.

Know What Kind of Debt You Carry

Is your debt secured or unsecured? This is an important question as it will give you something to rely on when negotiating your debt. If your debt is secured, the creditor is allowed to take your property if you default on the loan. If you took out a car loan, they could take your car and the same goes for your home or any specialized business equipment you took a loan out for.

If you have unsecured debt, the creditor cannot take your property. This usually relates to store credit cards where you are allowed to purchase merchandise without any security.

Knowing the Difference

Both secured and unsecured creditors has various positions of strength when it comes to collecting a debt. Obviously, secured creditors can just come and repossess the secured property and leave you without. Unsecured creditors can’t repossess your property but they do have other ways of making you feel the pressure. They can call and send multiple letters, they can sue or garnish your wages and they can even levy your bank accounts to receive payment. Stay strong during the debt negotiation process to avoid any of these things happening to you.

Remember that even though a creditor has the ability to harass you and make rather threatening phone calls, there are rules that they must live by as well. Creditors are subject to many collection laws which were put into place to protect debtors from harassing attacks.

Also, it is very expensive for a creditor to sue you and a lawsuit doesn’t always mean they will be reimbursed what you owe them. They may get a lesser amount or nothing at all.

Be Careful With What You Pay With

In debt negotiation, cash is always the best option for settling debts, it can even be used to get a much lower rate or pay less than half what is owed. No, you don’t have to rush to the bank and take out a big stack of cash to give the creditor; you can pay over the phone using your debit card to save time and fully utilize the convenience a debit card offers.

With that being said, let’s look at some of the ways you should never pay off a debt:

  • Never pay off a debt using secured property. Taking out a loan against your home or your automobile is a fast way to put those items in jeopardy. If you cannot pay those debts, you could lose your home or car just as quickly and be in even more financial trouble.
  • Your retirement account is a big No NO!  People often look to their 401K plans when faced with a large debt that is in need of being paid off quickly.  Just the same, don’t ever use retirement funds to pay off a debt; doing so will incur a hefty tax fine that will need to be paid making the original debt that much more costly.

Take Notes

During the debt negotiation process, taking notes can save you a lot of hassle, and maybe even some money, in the long run. Creditors will almost always give conflicting information and keeping this information straight can be difficult. Take accurate notes of the conversation so you have these to refer to when talking with the creditor again.

Debt negotiation is not an easy process but it is very rewarding. Knowing and avoiding the pitfalls is the key to successful negotiations.



  1. These are some excellent tips. I have never been in a position myself where I have had to negotiate debt, but I do remember some of the upsetting times when my parents would struggle to keep the creditors off the phone. Since that experience I’ve made a commitment to never build that much debt, and so far I’ve managed quite well. However, there will surely come a time when I will need to take out a large loan, and hopefully these tips will keep me out of making bad negotiation decisions.

    • Hi James, I’m glad you learned from your parents mistakes! To often we repeat the same patterns. My mother always says everything is negotiable! Recently I had some hospital bills I was making payments on when she came for a visit. She called them up, and got 45% knocked off my bill! I didn’t even know you could negotiate a hospital bill! My mom is a MASTER negotiator! Good luck in obtaining a loan and remember to keep pushing for the best deal possible!

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