Best Ways to Negotiate Business Credit Card Debt

A significant number of American small businesses are struggling to make ends meet, let alone grow their operations. For those who have put up business credit cards to prop up their operations, this often results in a large amount of debt they may or may not be able to pay off. If this is your current situation, you need to work out a strategy to clear off your debt. One of the best ways to do this is to work with your creditors for debt relief. With debt relief, creditors can help you settle for a total or partial payment of the debt so that you can attain better cash flow. Many card companies are willing to work with debtors so long as they try to fulfill their payment obligations. Reaching out to your creditors about your financial issues is something you shouldn’t feel embarrassed about. Don’t feel helpless and let yourself get overwhelmed by this situation. Being in debt is not the end of the world.

In the meantime, make sure to make your payments on time - or even early. Running late every month allows the interest to build up on your account, and will make your statements (and payments!) even higher. Falling behind also means that your payment status will show up as late on your credit report. These late payments can stay on your report for up to seven years, which will make your credit rating low. It is important to keep your credit good, because bad credit can increase the rates you’re charged, and can cause many lenders to deny you altogether when you look for loans in the future.

Be Proactive in Contacting the Creditor

If you cannot make the full monthly payment at this time, make contact with your creditors to see if you can get relief. Don’t wait until you are getting notices in the mail to make contact. When your account is turned over to a collector, it not only creates stress for you, but it also further hurts your credit score. While the collector might get you to pay a portion of what you owe, the company in the end might only end up recouping part of what you owed. Many companies are willing to listen and even renegotiate the terms of the debt.

You need to come up with a payment plan before you talk to them, and the easiest way to do this is to start a budget. First off, evaluate your overall finances: calculate your debts, budget your monthly expenses, and find out how much extra cash you have available.

If you have a lump sum, it can help your chances of having the creditors forgive a certain amount of your debt and still be better off in the long run. Of course, if monthly payments are manageable, then keep the cash in your business. Also keep in mind that settling for a lesser amount on the debt can affect your credit score, but if cash flow is a problem it may still be the best decision.

The ability to stretch out your payments, and make them more manageable in the long run, is a good reason to choose a payment plan, as long as you take the time to work out the true cost beforehand. Ask for a written statement for the payment plan, so you can understand how much the payment plan will actually cost you over time. You can then use the rates to calculate the true APR and compare it to the old interest rate.

Negotiating with Your Creditors

Try to be polite when you are negotiating with your creditors. Being unpleasant will not encourage them to help you. After all, you are asking for their help and patience with your situation. You are the one asking for the discount, so you want to make them feel sympathetic towards you, but not so sympathetic that you end up sounding pathetic.

If the discussion is becoming personal, or it isn’t going well for you, it might be worth ending the call and trying again later. When you call them back, you should be calmer and more prepared to go through it again. Never let yourself get angry on the phone, because a calm head makes much better decisions than one that is emotional.

No matter how you got into debt, making every attempt to explain your situation to your creditors can make a difference in how they look at you. Tell them if you have lost a job, or if you have fallen behind due to unforeseen circumstances, and be specific. Make it clear why you are worthy of their extra patience, by letting them know what steps you are taking to prevent this happening in the future.

Write out your story and go over it before you call the creditors. Make it a heartfelt plea, but more importantly, be clear, confident, and to the point. Don’t make the story a long, rambling one though. By reaching a resolution together with them, you both get some closure to a negative situation.

When you call, ask about anything you are unsure of. You need to keep track of exactly what you agreed to, as well as who you spoke to when it happened. Debt isn’t something that should be left to memory.

Don’t panic if you hear from a creditor that you are being sued, that they are going to garnish your wages, or seize any of your assets. Depending on the circumstances, they may not be able to take these actions. Make a note of any aggressive or confrontational statements made to you, and use them to research any legal rights you may have.

Consider Consolidating

If your debt is still overwhelming you, consider consolidating. As the term implies, this means combining two or more loans into one and making a single payment. By consolidating several credit card debts into one lower interest loan, you may find a reasonable rate and be able to attain lower payments. Another alternative to debt consolidation loans are low-interest credit cards that can be used to pay off existing credit card debts.

If you do not qualify for either option, take the time to research a credit counselor. Consider utilizing an outside agency that can combine all your payments into one single payment. They can pay your creditors on time. Make sure to get a reputable, certified agency. Some can be linked to predatory lenders who are out to get your money instead of help you with your debt.

Be optimistic with your attempts in reaching out to your creditors. While debt may seem overwhelming, there are steps you can take to mitigate it. Don’t let your debt ruin your business. There is always something that can be done to help you get back to the point where your business is at its most efficient.