How to Start a Debt Negotiation
- 1). Ask to speak to someone with the authority to lower your payment. This person's title varies based on the type of debt you are negotiating. In a retail store or car dealership, it would be the manager or owner, whereas if you're negotiating a house payment, it would be the bank's national mortgage headquarters. If you're negotiating a hospital bill, ask to speak to the person within the collections department who has the authority to negotiate your bill.
- 2). Ask the person of authority what address (snail mail, email or both) you can use to contact them directly with a request regarding your bill. Also ask for a direct phone number to follow-up. Ensure you have the correct spelling of their name.
- 3). Decide whether you want to ask for a lower overall payment or lower monthly payments. You are more likely to get the latter. If you ask for a lower total payment, you should have a strong reason why you feel this is justified.
- 4). Prepare a letter that makes your case for a negotiated rate. Be sure to start the letter by include specific identifying details describing your purchase---such as the order number (if its an item), car's make, model and year (if applicable), hospital check-in date or patient intake number (if applicable), or street address (if it's a home). Also include, in the first paragraph, the current terms and conditions---e.g. what the monthly payment is, what the term of the loan is, what the interest rate is, and what your total principal and interest payments will be under the current agreement.
- 5). Emphasize in the letter anything that makes you a good credit risk, such as a long history of on-time monthly payments with the institution with which you're negotiating. (see Tips).
- 6). Mention any security or collateral you're willing to use to back the loan, if it is applicable to your situation. For example, car loans are backed by the car itself, so mention that the car remains in great condition and is fully insured. Home loans are backed by the home, so discuss renovations, upgrades, or comparable houses in the area that have recently sold for more than your purchase price (evidence that it's value has risen).
- 7). Send the letter to the decision-maker. Follow up with a phone call 2 to 3 days later.
- 8). If the decision-maker rejects your request, ask the open-ended question of what incentive he is able to offer. Perhaps he cannot lower your monthly payment, but can take half a percent off your interest rate.