How To Negotiate Credit Card Debt in Australia
Debt negotiation with credit card companies can effectively manage your debt and improve your financial situation.
By working with your creditors, you may be able to negotiate lower interest rates, waive fees or agree to more manageable payment plans. If you want to know how to negotiate debt settlement, we’ve prepared some great advice and outlined tactics below.
However,we recommend appointing experts such as our debt settlement team to achieve the most favourable outcome. We understand the people, processes and procedures. We know the best way to approach discussions and what to ask when. Don’t forget - it's important to settle debt and minimise the chances of black marks on your credit report.
Preparation is essential for negotiation debt successfully
Before you reach out to your credit card provider, it’s crucial to ensure to have a clear understanding of your financial situation, including your income, expenses and debts. This means you won’t bite off more than you can chew when you initiate an offer to your creditors.
Create a budget to determine how much you can realistically afford to pay each month, which you can pass on to your credit provider. It’s also important to be prepared to explain your situation and why you're having difficulty making your payments.
Debt negotiation techniques
While every person’s financial situation differs, there are a few common ways to negotiate your future debt management with creditors.
1. Be transparent and realistic about your credit card debt repayment
Be upfront right from the start of the conversation. It will help set the financial parameters and the honesty surrounding your financial hardship will reflect well on you.
2. Propose waiving late fees or reducing interest rates
Request a lower interest rate on your loan or credit card or ask if they’d be willing to waive any accrued late fees. Your debt offer means they won’t have their cake and eat it, too, but at least they will recover the bulk of funds (to take the analogy further - the cake is more important than the icing!).
3. Propose a payment plan
Suggest a payment plan that is more manageable for your budget. This can help you pay down debt on more favourable terms. Or, if you have a lump sum of money available, offer to make a payment in exchange for a lower balance or interest rate.
4. Propose a lump sum settlement offer
This involves proposing a single payment. For example, let’s say your debt is $15K but you only have $11K of finances available. You could propose this one-off payment to provide the credit card company with immediate funds and wipe your remaining debt clear.
5. Dispute the debt
If the debt is not yours, you’ve already settled, it’s more than six years old or no court judgement has been made against you, you have grounds to launch a dispute.
6. Keep all debt negotiation respectful and polite
During the call, be polite and professional, and ask to speak with someone with authority to make decisions about your account. Take notes during the call, including the name of the person you spoke with and the details of your conversation.
After your conversation, follow up in writing to confirm the details of your agreement and keep a copy of the letter for your records.
Negotiating credit card debt can benefit all parties
Many Australians hesitate to approach their credit provider as they believe it’s a wasted effort. However, this isn’t always the case. Credit card companies want to get paid, and they know that if you default on your payments or file for bankruptcy, they may not get all their money back. As a result, they may be willing to work with you to find a solution that benefits both parties.
Common questions about debt negotiation
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There is no rule of thumb on credit card companies in Australia agreeing to a fixed or standardised percentage for settling repayments. Outcomes are typically determined on a case-to-case basis that consider your financial situation, the amount you owe and the circumstances surrounding your debt. All the more reason to ensure the best negotiation skills!
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Whilst the negotiations themselves might not hurt your credit score, actions taken thereafter can have an effect. For this reason, it’s essential to be aware of all potential outcomes and scenarios - you need to understand and accept these before negotiations commence.
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Yes, as we’ve already discussed, proposing a lower payment could be a clever debt settlement technique so that at least the credit card company secures some - versus none - of the funds owing.
Real Credit Repairers - your expert debt negotiators
We hope this has helped you understand how to negotiate debt with collection agencies and credit companies.
At Real Credit Repairers, we help clients settle debt every day. In fact, we’re experts at helping Australians get their financial future back on track. While negotiating with credit card companies can be a helpful strategy for managing your debt, it's important to remember that it's just one part of a larger plan towards credit repair and improving your financial health.
Aside from debt negotiations, we can help you repair your credit score, improving your financial opportunities. Learn more about our credit repair service or contact us today.
