Tuesday, May 21, 2024

Negotiation persistence saves $21,000
by Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.

Scott Bilker

The best part about DebtSmart.com, for me, is when I get email from readers about their success. Amy and I have been corresponding about her situation regarding settling a debt. When you settle a debt, your goal is to negotiate with the creditor for a deal that benefits everyone. For the debtor, this means reducing the balance and making the payment terms reasonable. For the creditor, it means larger payments and a guarantee of payment in a specific amount of time.

The trick is knowing how low the bank will go when dealing with them or their third party representatives (debt collectors). Typically, I’ve found that you can, on your own, get the amount down to about 50% of the original balance. However, the bank will usually want that settlement amount in one payment.

In my latest book, Talk Your Way Out of Credit Card Debt, I present one chapter (chapter 7, no joke intended) where I negotiated a settlement for a friend. This chapter includes all the phone call transcripts from those negotiations. I was able to get the bank to 55% with one payment, which I thought to be pretty good. I am thrilled to report that a reader of my book and DebtSmart Email Newsletter was able to beat those terms!

Amy originally contacted me to let me know about her success in general. We corresponded a few times regarding her latest negotiation with her credit card bank. She already was doing well, so I asked her to let me know what happens--and she did! I must say that I am very impressed by her success and want to share it with everyone at DebtSmart.com so all can see what is possible when you are persistent! Congratulations Amy, and thank you for allowing me to share this with everyone!

Here’s her story, in her words:


My debt was $35,215 and I called to explain that we thought we had to declare bankruptcy because we didn't have any other options. I let them explain other options, blah, blah, blah.

Then I told them that currently, we only had 25% ($8,803.99) and didn't think that was enough to settle. They came back with--THAT is a really low offer, but they would settle at 45% ($15,800). All I could say was " I know, I know" that's why we are looking at Bankruptcy.

The attorneys handling the debt collection have to "go back" to the bank (or so they say..) to see if they will accept the offer and they were able to "present it" even though it was a very low offer (25%). I said, “Hey, it doesn't hurt to try.” This gave me my low starting position, which I think helped me to get to 40% in the end.

The bank came back with $15,000 flat, and then the rep said that they would POSSIBLY accept $14,000. I left a message later in the day saying that I could go to $10,000, but could make all the funds available within 10 days. They didn't call back. So two days later, I called just to confirm that they got the message. They did and continued to stick to the $14,000. I offered $13,000 with the funds available immediately and they stuck to $14,000. I was done and took the $14,000 (39.8%), but am paying in 3 installments--$7,000 in a couple of days, $3,500 in 30 days, and $3,500 in 60 days.

Hope this helps. I will continue to let you know how I do.

Your book is great!!


Reader Comments
" Informative and encouraging for some folks. I'm not that big a fan of negotiating down one's debts. I've never been in a position where it was necessary for me, so perhaps I'm viewing this from an ivory tower of sorts. It's just that I've always tried to live within my means, and not charge a bunch of stuff that I couldn't (ultimately) pay for. Amy might well have been painted into a corner by medical bills or whatever, and I'm certain that I'd change my position if that happened to me. I'm definitely a DebtSmart fan. I especially appreciate the techniques of a) monitoring your credit b) moving debt to lower-rate accounts."
--John Griswold
" Very informative and eye opening--shows persistence to keep negotiating and knowing when it was the final offer and repaying the amount on their own terms. DebtSmart has come a long way baby....it has grown not only in subscribers but in those who now are educated about financial matters. I can see a better world because of all the information you help with. Thanks for a wonderful job and a growing family we all learn from."
--Diane Ayers

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