Renegotiate Debt With Your Creditors

It sounds kind of crazy but did you know that you can sometimes renegotiate your debt by contacting your creditors? Yes, that 21.6% revolving credit loan with a $3346 balance may be a stretch for you to pay off. Instead, contact your creditor and renegotiate your loan. Can it be done? Definitely, but only if you carefully follow my step by step instructions for renegotiating your debt.

You've tried everything: you tried to borrow money from family members and they are all tapped out; you've moved money from one credit card to another but your overall debt still exceeds 30 thousand dollars. You've even spoken with a credit counselor who took one look at your finances and shook his head in disgust. What to do next? Well that's easy:

Contact your creditors and explain to them your financial situation. Be brutally honest: mention that if they cannot renegotiate the terms of the contract, then you will be forced to take a drastic step: file for personal bankruptcy.

Likely, if you take the drastic route and come clean about your financial picture, your creditors will be receptive to new loan terms. If they don't then neither they nor you really have any alternative: you will have to file for personal bankruptcy. Of course if they want any part of the $3346 debt back, they will renegotiate the loan.

When renegotiating your loan make certain that the new terms are a lot more generous then the old terms. Specifically, that 21.6% interest rate on your revolving credit loan has to give. A rate under 10% is not only possible, but likely. Hey, what difference does it make to them? All they want is their money back. If they see you as being unable to repay then they lose out. So, don't be surprised if a creditor tenders a zero percent offer too!

Of course, you are playing your hand at this point in the game to show them exactly where you stand [bankrupt] and where they will be [without your funds] if they do not relent. Thus, it is very important that you not be bluffing and you must be prepared to file for personal bankruptcy if there simply is no way out.

Worried about trashing your credit rating? Don't worry: at this point in the game your credit score has tanked. Putting pressure on creditors to refinance won't make things worse, but a personal bankruptcy could, especially for them.