Emotion and haggling through debt settlement

Life is about more than just the facts. It’s also about how you communicate certain information. It’s also about collaborating with other people in order to create a solution that works for all parties involved. Emotion and tone can also play factors in a final outcome. When you are working out a debt settlement with your creditors or a third-party adviser, you need to use more than just the bare facts. Two things you might need to be prepared for are having an emotional appeal and haggling.

Now, when I say have an emotional appeal, I don’t mean seem desperate. Crying your eyes out or angrily threatening to declare bankruptcy are examples of too much emotion, and your creditor will not want to work with you. You need to be calm when negotiating a final deal. You need to make it crystal clear that you cannot pay the entire amount of your balance, but you must also assure your creditor that you are able and willing to pay a percentage of it.

Keep the thought of the “B” word in the back of your mind, but don’t say it too much. Tell your creditor you know bankruptcy is an option and you have thought about it, but it is a last resort. Bankruptcy might seem like a fresh new start for you with the slate wiped clean, but your creditor will get none of the balance from your discharged debt, and he/she might not be willing to do business with you anymore. This could also hurt your prospects for any new loans after recovering from your bankruptcy.

Facts do play an important role in describing why you are in the situation. If you have recently lost your job, the creditor needs to know this. If you have lost assets from a recent divorce, this is also crucial information. This information, though, must be delivered in a calm fashion. Being polite and level-headed can go a long way toward making a deal.

After all, a debt settlement is ultimately a deal. You don’t have to pay the full amount, and your creditor doesn’t get the full amount. I’ve been watching a lot of the TV show “Pawn Stars” lately, and I must say that haggling is the key towards getting a deal. When determining a final amount to pay, you need to have more than one number in mind. You need to know what you can pay and what you would like to pay.

If you have a $5,000 debt, you might be able to pay the entire amount. However, you have other expenses to worry about. There’s the mortgage, car payments, food, utilities, and the list goes on if you have kids. You need to have a minimum and a maximum amount you can pay, both of which will be well below the $5,000 amount. The final amount will not be the first amount, so you need to have a comfortable range in which you know you can pay. If you are looking at it in terms of percent, look between a third and two thirds of the total amount, and the final result may gravitate toward the middle.

Saying the right words is not an exact science, but being overly emotional and not having numbers in mind can result in disappointment. Do some research, and don’t immediately spout out the “B” word.

David Pilley

David Pilley

David Pilley is a May 2010 graduate of the University of North Carolina at Chapel Hill, with a B.A. in communication studies and a creative writing minor. He is a native of Raleigh, North Carolina.

He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.

Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.

In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
David Pilley

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