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3 Tips for Negotiating Down Your Debt

Once you get into debt, it can be hard to pay it all off. Yet what many people never realize is that asking creditors for help in paying down your debt can actually work in some cases.

In the following video, Motley Fool investment planning editor Lauren Kuczala talks with longtime Fool contributor and financial planner Dan Caplinger about negotiating with creditors for debt relief. Dan notes that high interest rates and low minimum payments make credit card debt the hardest to escape from, with fees for late payments and over-limit charges adding to the burden. But big financial institutions have worked hard to get their card-delinquency rates down, and they'll often look at potential solutions that get bad debt off their books. Dan offers three tips for communicating with your lender and coming up with a debt solution that will work for you.

Citigroup (NYSE: C  ) is a big credit card lender, but for investors, its stock looks tantalizingly cheap. Yet the bank's balance sheet is still in need of more repair, and there's a considerable amount of uncertainty after a shocking management shakeup. Should investors be treading carefully, or jumping on an opportunity to buy?

To help figure out whether Citigroup deserves a spot on your watchlist, I invite you to read our premium research report on the bank today. We'll fill you in on both reasons to buy and reasons to sell Citigroup, and what areas that Citigroup investors need to watch going forward. Click here now for instant access to our best expert's take on Citigroup.

Editor's note: The volume levels in some segments of the video are low. We apologize for the inconvenience.


Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On May 04, 2013, at 10:43 PM, btnfool wrote:

    I don't believe this article was written by anyone who has ever actually tried to negotiate down a debt, but rather by one of the myriad of "writers" who piece together information from articles they have read and rewrite it in an attempt to get paid a fee. Credit card companies do NOT respond in a positive way to requests for assistance from strapped cardholders no matter how dire their situation may be. They MAY offer a very short time modification of a payment (about 30 days) but no real assistance, saying they're not allowed to do anything more. Their idea of a creative way to reduce delinquencies is to charge off the debt by selling it to a vulture collection agency. There's nothing to keep you from wasting your breath trying but they refuse to consider anything but "pay up now!" This is from personal experience making a very modest

    well reasoned request for a modification of term wherein the credit card company would have received everything coming to them. Anyone publishing an article like this should consider the validity of the source before giving unsuspecting readers false hope.

  • Report this Comment On May 05, 2013, at 8:04 AM, stevema1 wrote:

    I was a Citi bank customer for over 25 years I always paid my card in full then we had the crash in 2008 and I lost everything, I had a bal on my Citi card about 8 grand I usually pay that off but could not this time. I called them they say OH your a great customer and I asked that my interest rate be taken down, (it was about 15%) they sent mt to the collections department. They said they will have to notify the big 3 I said all I am asking for is an interest rate lowering. Tough if you want that then they will consider me a default. I was then sent to another person, They said We can take you to 7% for 2 years then call us back and we will see what options you have then. BUT you have to cancel the card. OK so I did.

    After the 2 years I called and they said since you canceled the card there is nothing we can do and now your at 19%.

    I will NEVER bank with them again I am taking out a home loan at 3% to pay this off and will NEVER use a credit card again cash or debit or nothing.

    And just imagine they are borrowing from US at 0% they charge me 19% and they think they are doing me a favor. SCREW THE BANKS.

  • Report this Comment On May 05, 2013, at 10:01 AM, TMFGalagan wrote:

    @btnfool - Your bad experience is unfortunate. During my career as an attorney, I represented several clients who needed to negotiate with credit-card companies to reduce their debt. They were successful in getting substantial reductions.

    As I note in the video, you can't take the first "no" as a final answer. Obviously, card companies aren't going to just give money away, but if you take steps like the ones I describe, you can sometimes -- not always, but sometimes -- get substantial success.

    best,

    dan (TMF Galagan)

  • Report this Comment On May 05, 2013, at 5:24 PM, billiardbrat wrote:

    I got a lot more believable and likely more reliable information from the comments regarding this article than the article itself. I was hoping when I joined that Motley Fool would vet the information that they put their name behind very carefully for accuracy and authenticity before publishing it for their members to digest. My time is valuable and I do not like to see it wasted on gathering misinformation.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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