Many Americans have a significant amount of debt and find it difficult to reduce their burden. Negotiating with creditors is a good way to get your life back under control. There are a few things you need to do for this to work.

Credit Statements

Financial Documents like card and loan statements can help determine how much interest you are currently paying.  Look over each statement and determine which interest is the highest and should be targeted for negotiation.

For example, if you pay 21.9% on a credit card you can lower your monthly bills significantly by getting your interest reduced to a manageable 12%.  The lower percentage means that you will be paying out less money monthly covering interest charges and a large part of your payment will be used to pay down the principle on your loan.  Just doing this could greatly increase the rate you pay down your debt.  It is important that if you get your percent lowered, you continue paying close to the same dollar amount to pay down your principle faster.

Contact Your Creditors

All of your statements have contact information on them with ways to contact the credit company.  Call them and ask to have your rate reduced. This is the only way to get your interest rate changed.  Brad Dakake, a consumer advocate for the Massachusetts public interest research group, says “there’s no incentive for them to lower your rates unless you call.”

Be aware that just because you call them doesn’t mean your rates will automatically decrease.  Sometimes credit companies will reduce your rate simply because you asked, other times they will have to re-evaluate you as a customer.  You might have been considered a worse credit risk when you first signed up but checking again they could determine your status has changed.  Companies also treat unknown customers, including you when you first signed up, wearily.  They give these customers higher rates to protect against a customer who will not pay.  So if you have kept your account in good standing, the credit company will be much more likely to work with you on your rates.

Loan Forgiveness

A harder thing to get accomplished is to get your balance reduced or forgiven.  And how does that affect your credit.

Lenders do write off loans if the customer has no way of paying, but this comes with a serious negative mark on the your credit ratings and will affect you in years to come.  It’s not bankruptcy, but credit companies will treat it very much the same to bankruptcy.  This can come back to haunt you when you try and rent an apartment, buy a home, even when applying for some new jobs.

Plan Ahead

If you really are in serious debt, the only sure method to get out is to make a plan and stick to it.  Try and find ways to get the debt paid down.  Look at your spending habits,  Talk to a qualified financial advisor at a debt consolidation agency.  They might be able to help you get your life back together and find your financial freedom.