debt-negotiation

Debt negotiation has always been a delicate process where each party strives to get the most of the deal. However, they often forget that negotiation means reaching a compromise, striking a balance. Here’s where the main difficulty of that process lies, but there’s nothing to be afraid of.

Pitch in! Today, we will share some advice on how to make debt negotiation worth your while and efforts.

How to Negotiate Debts Effectively

Remind about Details

Start the talk by reminding the debt’s details to make sure you are on the same page with the consumer. After all, the consumer might forget about the debt, and a simple reminder may help to iron things out without additional negotiations and disputes. Nevertheless, it’s still a good tone to kick off with a reminder for a proper introduction.

Be Precise

In debt negotiation, appeal to facts. Take time to revise all of the debt details before contacting the consumer. You can also revise the techniques and arguments you can bring during the negotiation. Sure, every case is unique, yet don’t neglect to take a piece of advice if it suits the case.

Stay Professional

Though the debt negotiation process may seem harsh and frustrating (after all, every consumer and each case is different), you should always stay polite while talking with the consumer. Diplomacy is the best policy and the best way to get the required payment from the debtor.

However, the consumer may try making excuses for not repaying the debt, which should not upset you anyway. Stay calm and focus on finding the solution to the issue; at any rate, you should find a compromise in the form of a sum that should satisfy both parties. Remember that receiving a part of the debt is better than not receiving anything at all.

Treat the Consumer Politely

Most debt negotiations fail because collectors are too pushy right from the start, talking in a “demanding” tone with consumers.

Yes, the debt may be high, and the account may be past-due, still, it’s about staying professional. Don’t treat the consumer as inferior; life situations may be unpredictable, forcing them to delay payments, and your aggressive stance won’t bring you closer to getting things done. So, again: stay polite in each case.

Set Realistic Expectations

Thorough credit scoring will give you a clear picture of the consumer’s paying capacity, even before contacting them. Having realistic expectations, you may come up with alternative offers, those that are likely to fit the consumer’s budget.

After all, you want to make the conversation as productive as possible, isn’t it? However, don’t go beyond the required minimum sum to cover, which is individual in each particular case; before negotiating the debt, you should have a clear idea of what deal you are ready to accept.

Ask for the Consumer’s Counteroffer

During the process of debt negotiation, talk to the consumer, don’t listen to yourself only. After you stated your intention, it’s time to ask the consumer to comment on it to understand their stance. Is the current offer acceptable to the consumer? If not, what can they offer as a reasonable alternative?

The consumer may have different counteroffers; one is more beneficial than the other, to them first. Yet, you should not accept any of those right away. Take a minute to process, and consider all aspects, primarily the ones affecting your business. Mind the affordable minimum for the current debt negotiation!

Look for “Good-faith” Signs

Whether you agreed on payment or not, ask the consumer for a gesture of good faith, such as partial agreement or collateral. Even if the consumer is unable to pay you anyway, it may only be for now, so don’t quarrel with them; maintaining good, professional relations should always be the key to making a deal.

At any rate, remember to explain the ramifications to the consumer if they fail to pay you in time.

Follow Them Up

Is the deal closed? Even if not, your following course of action is the same; from time to time, send follow-up letters to maintain contact with the consumer and stay sure your debt negotiation agreement remains valid.

If you deal with persistent defaulters, be consistent; if you have to threaten them to enforce legal action on a specific date, then do that no later than the date you announced. Adversely, delays will make you look amenable and the whole situation less severe.

Bonus Tip: Leverage Debt Negotiation Software

For your convenience, the Paydit solution makes debt negotiation a no-brainer. It elegantly automates the entire debt collection, making its essential procedures, such as the debt negotiation itself, billing, internal procedures, compliance, and, of course, settlement, completely autonomous.

From now on, you can have the upper hand and focus more on handling specific consumer-first tasks. Meanwhile, the intelligent system will adjust debt consolidation procedures to internal policies and provide essential statistics on consumer behavior and solvency.

A few words about compliance; the automation inherent in our platform makes it easy for you to settle debts while following the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act. It includes the automation of legal wording in letters to be sent to consumers, setting the right time to make calls (not too often or not too frequent, or both), and more.

In Conclusion

Finally, debt collection is the art of making a deal. Through trial and error, you practice and master it, while the right tools at hand facilitate the whole process. However, firsthand, much depends on your professional skills; are you a negotiator? Or you seek to sort things out exclusively in your favor? The answer to that question will help you understand your chances of making the most of the deal.

Want to discover Paydit’s regulation capabilities in full? Request a demo on the website.

Nick Varnitski, Co-Founder and CEO at Armada Labs