Negotiating With Creditors

If you would like to have your interest rate, minimum payment, or other terms and conditions changed in your current agreement with one of your creditors, the following information is designed to help you. This information is also useful if you are a survivor of a major natural disaster such as tornado, earthquake, or hurricane.

Note: 1 $ Wiser Consumer Education, Inc. does not and will not contact any creditor on your behalf for any reason. 1 $ Wiser Consumer Education is an educational organization. The information stated below is based upon our best and most current research into this area. It does not consist of legal or accounting advice. For the latest information from the Consumer Financial Protection Bureau (CFPB) or to file a complaint against a creditor, go to

It is important that you note from the beginning that you may not achieve the reductions which you seek without consistent follow up with your creditor. You may have to write to your creditor multiple times.

For best results, all requests must be in writing sent certified via U.S. Mail, signature required. The signed, return receipt you receive is your proof that your request has been received by your creditor.

All requests should clearly state your account number, your name and address as listed on the account, the desired objectives and should include documentation of loss of income and inability to continue payments. Suggested documentation includes (but is not limited to):

  • FEMA Assistance approval notice
  • Lay-off/Termination Notice
  • Unemployment benefit statement
  • Disability benefit statement
  • Food Stamp statement
  • Current bank statements
  • SSA/SSDI benefit statement
  • Hospital/medical bill
  • List of all household residents, age, income, source of income, and relationship to you
  • Tax return
  • W-2
  • 1099

If you purchased credit card payment insurance or other debt repayment insurance, documentation as specified in your policy will be required before the insurance will kick in. Make sure you understand all of the terms and conditions that would invalidate the coverage, such as continued us of a credit card. READ THE FINE PRINT!!!!

When negotiating with governmental agencies, such as the IRS,interest and/or penalties continue to accrue even if payments are deferred.

Court ordered payments, i.e. judgments and garnishments usually require adjustment to the court order by the courts. You should consult your attorney. Note that judgments and garnishments usually cannot be taken SSA/SSDI benefits.

Negotiating for changes in your consumer debt usually yields poor results and usually hurts your credit rating. Any time you consider negotiating with a creditor regarding consumer debt, you should do the following:

  • Stop using credit card
  • Stop using payday loans
  • Stop using title loans

If your debt is secured, you should be prepared to lose the collateral, i.e. ATV, refrigerator, HD/Plasma, etc.

Many creditors will not negotiate with you as long as you are current with your payments. If you are not current with your payments, many creditors will not negotiate with you until you are 6 or more months behind in your payments.

Doctors, hospitals, dentists, medical laboratories, and other medical facilities are especially quick to sell past due accounts over to a collection agency once they reach 60 days past due. Make sure you keep copies of all payments made by your insurance company and all payments you have made. Contact your medical provider's financial aid or accounts receivable department immediately if you need to set up payments over time.

Always obtain a written, signed agreement from your creditor for the negotiated settlement.

Never allow a creditor to automatically draft a payment from your bank account.

If you are considering a debt management plan note:

  • Debt Management Plans (DMP) are dangerous
  • Many under Federal investigation
  • Most charge high up-front fees
  • Most charge monthly fees

ALL Debt Management Plans (DMP) have a negative impact on credit scores


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