The 7 Commandments of Debt Negotiation

If you're ever faced with a debt problem remember that when it comes to debt negotiation, you have the advantage. Try to stay calm and avoid getting to emotional.

While you can always seek the help of a debt counseling agency to help you out in times of need, keep in mind that you have the power yourself to negotiate with your creditors.

If you decide to face your creditors, here are 7 basic things to remember in negotiation:

1. Understand Your Legal Rights - When collecting a debt from you, a debt collector must obey the law. For more information about your rights as a debtor, read this informational page from the Federal Trade Commission.

2. Avoid negotiating with your creditors over the phone - Phone records are hard to keep track of and are basically useless. If a creditor calls you, simply hang up. After all, collection agencies call you for one reason, to get your bank account information.

If you must use the phone, keep a detailed log of who you spoke with and when you spoke with them. If possible try to speak directly to the supervisor in charge. After all, most phone reps are following a script don't have the power to make negotiate with you.

Also, recording your phone conversation is a great way to protect yourself and your rights. Some states allow you to secretly tape your phone conversations. Other states allow you to tape your phone conversation with the other party's permission. If if you tell the debt collector you are going to tape the conversation and he or she keeps talking, that's considered giving permission.

3. Get it in Writing - Get proof of payment agreement in writing. Send a letter to the debt collector outlining the payment agreement. You'll want to send this letter via certified mail so you'll receive a receipt once the letter is delivered.

4. Maintain good records - File all collection letters and keep detailed notes of collection calls. This can be the difference between a good and bad settlement. Don't expect them to remember you or what you agreed upon. Remember to keep a copy of every letter you send and every letter sent to you.

5. Negotiate Away the Penalties and Fees. Many credit card companies would be happy enough for you to pay the original debt even without the extra penalties they add on and will usually be more than agreeable in waiving these fees.

6. Take Time - Never feel rushed to reach an agreement. Don't accept the first, or even second, settlement offer. A debt collector will push you to send them money immediately. Don't do anything until you have confirmation of a payment agreement in writing.

If the creditor refuses to work with you, do not give up. Wait for 1 month and present the your terms. As time passes by, the creditor may realize it is in their best interests to settle the debt with you.

7.Stay Calm and Focused - Bill collectors are trained to harass and upset you. No matter what a debt collector says, keep your cool and stay focused on the negotiation. The more in control you are, the more likely you are to get what you want out of the negotiation.