Don't Bluff Your Creditors
When approaching your lender to make an offer of reduced debt
repayments, it's best to be completely honest and offer them as
much as you can realistically afford to pay month by month.
Whatever happens, don't try to call their bluff.
After all, if you've read my article on talking to your creditors, you might have noticed a
gung-ho way of attempting to deal with your debts.
You might think that the best thing to do is to become ballsy
about your situation. After all, you know that they don't want
to take legal action (because they stand to recover less of
their money), and they know that you know this.
So you brazenly call your lenders' bluff. You ask for interest
to be suspended and then offer them a ridiculously low monthly
repayment, backed up by the threat 'if you want any more then
I'll file for my own bankruptcy and you'll get nothing'.
Great idea? Not quite!
Most lenders will have heard this type of threat every day of
their working lives. It's just defensive bravado that will make
your position worse.
Do you know how most lenders will respond to this type of macho
posturing? Well first they'll stop being so understanding and
then they'll reply 'go ahead and do it!'
Now bear in mind that most lenders (e.g. banks, building
societies, insurance companies etc) are massive organisations,
with vast amounts of money at their disposal. So as much as you
might like to think that your business is vital to their
continued survival, it isn't! Even if they received nothing from
your bankruptcy, it would make less of an impact on their
balance sheet than a fly hitting an express train head on.
So they double bluff you.
And then what do you do? Do you back down and look weak (in
which case further negotiation will be....difficult, to say the
least), or do you follow through with your threat and do
something (i.e. file for your own bankruptcy) that you don't
really want to?
Nasty!
You should avoid this at all costs. Don't even put yourself in
that position!
As I said earlier, they don't want to start legal action, but
they will if they have to! So don't even test them with this
little bluff.