Critical Steps to Win Over Creditors

Times are tough for everyone. And sometimes debt is just inevitable. Whether an individual is unable to pay a debt obligation of $1,000 or a business is facing default in the millions, the overall recommendation for handling the debt negotiation remains the same. It’s important to communicate, consult with the appropriate experts and proceed with caution.

To help navigate through the debt negotiation process and win over creditors, here are five critical pointers that have helped homeowners as well as business owners succeed in negotiating their debt.

1. Stay in touch with creditors.
While it may not feel good, keeping the lines of communication open benefits both parties. Banks and creditors want to work out a payment arrangement. Ignoring and avoiding creditors gives them no alternative but to escalate collection action.

2. Contact a credit professional early in the process.
For those who are uncomfortable with negotiating, contacting a professional about a debt issue may be the answer. Reach out to a non-profit credit or debt counselor early in the process. Procrastinating can make the situation worse.

3. Consult with the right kind of attorney.
“Short sales”on properties are more common these days, yet going through a “short sale” does not automatically relieve the obligation to the bank. Mortgage obligations are written contracts, and real estate agents cannot interpret or provide advice on the law. Not all attorneys specialize in real estate or debt resolution either.

4. Never sign a blank document and watch those page numbers.
How many business owners have lost thousands of dollars by signing blank forms? Plenty. Don’t become one of them. If a document has a blank page, draw a large “X” across it and initial it to prevent later insertions. Another safeguard is to make sure the document is properly numbered; if it has 7 pages, they should read “1 of 7,” “2 of 7” and so on. It’s a protection against fraudulent or doctored paperwork.

5. Be on the lookout for scam artists.
Avoid individuals who aren’t properly credentialed. That should be a top priority. Anyone involved with a real estate transaction needs to be licensed — from federally regulated loan officers, to state regulated real estate agents and attorneys. And even then, ensure that the professional has the experience and reputation necessary to help out in a financial or legal crisis.

The odds of achieving a successful debt resolution are greatly improved by following these steps. Staying in touch with creditors shows a sincere interest in a positive outcome. Initiating contact with a credit professional before the situation reaches an extreme may result in more options being available. And talking with the proper professional can prevent costly mistakes.

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