While there are many different types of debts, not all are equally negotiable. in fact, some debts are easily negotiated with creditors, while others may meet staunch resistance. the important thing is knowing which debts can, and should be negotiated, when finances become tight.
Credit Cards
As the most common source of debt among Americans, credit card debt can be fairly easy to negotiate with creditors. As in any negotiation, debtors may find that creditors are hesitant at first and that the burden of proof lies on them. Most creditors want to see two things before they will agree to negotiate debts. First, that the debtor is experiencing financial trouble. Second, that the debtor can afford to make payments as per the modified terms. Credit negotiations are most successful when the debtor can demonstrate their need for lowered payments, or modified payment terms, but also show they have some level of income to support these changes.
Student Loans
As one of the fastest growing sources of debt among Americans under the age of 30, student loan debt is reaching all time highs. Student loan debts often face many challenges as they are generally not eligible for discharge in bankruptcy. Most student loan debt borrowers find that negotiating directly with lenders is their best bet for finding a solution. Student loan lenders may be willing to offer a deferment, in which payments are temporarily suspended for a specified period of time. Deferments are given out for career changes, temporary medical illnesses, birth of a child or the startup of a new business. Borrowers experiencing long term financial hardships may be able to secure a forbearance or settlement agreement if they can demonstrate financial need.
Taxes
Most tax debts are also better negotiated directly with creditors as there are strict guidelines about their inclusion in a bankruptcy case. Most people are surprised to learn that the IRS offers several ways in which tax debts can be repaid. Taxpayers may dispute tax debt liabilities or request for a recalculation of tax liability of they feel there was an error. Those who can afford to repay their debts over time may be able to secure an installment plan agreement, in which they are given an average of two years to repay their debts. An Offer in Compromise is a type of tax debt settlement, in which the IRS agrees to accept less than the actual tax debt owed. These are generally reserved for those who cannot afford to repay their debts in full and are experiencing financial hardships.
Posted in 
Tags: 