Don't Bluff Your Creditors
When approaching your lender to make an offer of reduced debt repayments, it's best to be completely honest and offer them as much as you can realistically afford to pay month by month.
Whatever happens, don't try to call their bluff.
You might think that the best thing to do is to become ballsy about your situation. After all, you know that they donít want to take legal action (because they stand to recover less of their money), and they know that you know this.
So you brazenly call your lendersí bluff. You ask for interest to be suspended and then offer them a ridiculously low monthly repayment, backed up by the threat Ďif you want any more then Iíll file for my own bankruptcy and youíll get nothingí.
Great idea? Not quite!
Most lenders will have heard this type of threat every day of their working lives. Itís just defensive bravado that will make your position worse.
Do you know how most lenders will respond to this type of macho posturing? Well first theyíll stop being so understanding and then theyíll reply Ďgo ahead and do it!í
Now bear in mind that most lenders (e.g. banks, building societies, insurance companies etc) are massive organisations, with vast amounts of money at their disposal. So as much as you might like to think that your business is vital to their continued survival, it isnít! Even if they received nothing from your bankruptcy, it would make less of an impact on their balance sheet than a fly hitting an express train head on.
So they double bluff you.
And then what do you do? Do you back down and look weak (in which case further negotiation will beÖ.difficult, to say the least), or do you follow through with your threat and do something (i.e. file for your own bankruptcy) that you donít really want to?
You should avoid this at all costs. Donít even put yourself in that position!
As I said earlier, they donít want to start legal action, but they will if they have to! So donít even test them with this little bluff.
by Stuart Laing
Copyright (c) Get Out Of Debt
About the Author: Stuart runs a website dedicated to helping people get out of debt. So if you want to improve your financial position, visit www.icanhelpyougetoutofdebt.com for free, impartial information on how to reduce debt.