negotiation

How to Negotiate

Most civil lawsuits are the result of a breakdown in negotiations. But 99.9% of civil lawsuits settle, because negotiation is almost always the best way to resolve a dispute, in the end. If you negotiate well, you may just get what you want—and avoid litigation. But even if you don’t, you can set yourself up to take your dispute to the next level.

Successful negotiation takes strategy, patience, and a cool head. Here’s how to maximize your chance of success, whether you are negotiating with a debt collector, a landlord, or anyone else.

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Minnesota Attorney General Sues 6 Debt Settlement Companies

Minnesota Attorney General (AG) Lori Swanson has sued 6 debt settlement companies on the grounds they were not licensed to do business in Minnesota and overcharged consumers by hundreds of thousands of dollars. She commented:

“People who are swimming in debt are often desperate for a life preserver, but they should know that debt settlement companies usually just anchor them down with even more financial problems . . .”

While it is unclear how the debt settlement companies in the suit operate, many debt settlement companies require monthly payments from consumers. Part of that monthly payment, however, goes towards paying the debt settlement company, and not paying off the actual debt. In addition, many debt settlement companies only make the minimum payments on accounts, and ultimately leave consumers in worse shape at the end of their contract.

(photo: quaziefoto)

Deal With Your Debt: Negotiate a Settlement

Once a debt is in default—meaning you stopped paying it—one option is to attempt to negotiate a settlement with the creditor. (You can try this before you go into default, but creditors are rarely willing to play ball until you prove your poverty—and before they rack up some more fees.)

You could just pay the full amount of the debt, but that probably means paying a bunch of fees that bear little relation to your debt. And hey, it never hurts to ask.

When you make the call to negotiate a settlement, consider the following.

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Creditors willing to haggle with debtors in tough economic times

In anticipation of an increase in economic and credit turmoil, creditors and debt collectors are racing to collect as much as possible from their debtors and to minimize future losses. While many banks are cutting credit lines, raising fees, and reducing lending, creditors are also giving debt collectors more latitude to work with debtors in order to collect outstanding debts.

For example, Bank of America has made adjustments in interest rates, late fees, and even occasionally lowered loan balances, for over 700,000 of its credit card holders. Credit card companies are expecting to write off $395 billion in bad debt over the next five years, in comparison to $275 billion over the previous five years. With that in mind, there is definitely some room for negotiation.

What to ask for:

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