Timing Is Important When Negotiating a Settlement with the Bank

Timing is essential in negotiating a good settlement agreement. A bank is a highly departmentalized institution. When your loan is still in the current-loan servicing department, the bank has no incentive to settle with you or change your credit rating. It expects you to pay what you owe as agreed. Successful negotiating can start when the loan is in the collection department, charge-off department, or legal department. At this point, the bank has given up hope on you and should be glad to settle the account.

If you are facing a temporary cash-flow problem, you can try this to lower your monthly payments and avoid filing bankruptcy: Explain your financial problem to your creditors and offer to make monthly payments of four percent of the balance of the accounts. This is a reasonable offer and should be acceptable to many creditors as an alternative to bankruptcy. You can always increase your monthly payments later, when you are in a better financial position.

You may also want to consider the services of Consumer Credit counselors, a nonprofit organization that will negotiate on your behalf for a nominal fee. You can find the address in your local telephone directory. Many lenders are willing to work with this organization because of its national reputation.