Whereas there are lots of good articles that explain what to say to debt collectors, there are very few that make clear that you need to talk to the original creditor in a completely different way, and that’s a pity because although the original creditor doesn’t have to give you anything at all, you can receive a helluva lot just by using the right negotiating process.

But before we get into how to negotiate with an original creditor, we first need to establish if that’s who you’re dealing with.

Your debt is most likely still being held by the original creditor if,

a) The credit card company is still managing your account

b) You are less than five months in arrears

c) Your credit card accounts have not yet gone out for collection

Of course the simplest way to make sure it to call them, but you must write down who you spoke to, the exact date and time, and what they said, and you will have to note the same things every time you speak to the company from now on.

While it’s generally good to never call a debt collection company, the opposite is true when it comes to the original lender, because it’s not harmful to call, and you’re never going to work out a deal if you don’t talk to them.

We will now explain,

1) Why the original creditor will nearly always be willing to negotiate

2) How your credit rating will be affected

3) How to get the best possible deal from the company

But please be forewarned that the whole process is far from easy, very time consuming, and very stressful because the credit card companies designed it to be that way.

After you read what’s involved, and if feel like you’re ready for it, then give it your best shot, and if you stick with it and persevere then you’ll likely save yourself thousands of dollars.

If however you don’t think you can manage it, or won’t be able to stay the course, then consider visiting a BBB (Better Business Bureau) debt settlement company or credit counseling agency.

Why, When, And For How Much Will Creditors Likely Settle?

1) The original creditor will need to be convinced that it’s better to make a deal than to force you into bankruptcy, and the closer he believes that you are to bankruptcy, then the better the deal will be.

2) You will need to be between 60-90 days in arrears, and the creditor will most likely check that you are a similar amount in arrears with all your other creditors too.

3) Thanks to the current financial crisis which is causing huge numbers of defaults, foreclosures and bankruptcies, the vast majority of credit card companies are far more willing than usual to negotiate with clients that they fear might default, and the majority of them will now agree to settle for between 35-40% of the total debt owed, and although some are agreeing to 50% it’s an exception rather than the rule.

When dealing with collection agencies and debt collectors, you must get something in writing confirming the amount agreed upon as full settlement, but you’re unlikely to get a similar letter from a credit card company, and to the best of my knowledge, you won’t ever need one.

How Should You Pay The Company?

If the company will agree to you paying with a money order or cashier’s check, then that would be the way to go, but most will insist on you making your payment over the phone, and I don’t think there’s any real problem with it, and if you still having working credit cards you can even pay them with one :-)

How Will Your Credit Rating Be Affected?

After you make your final payment, your credit report will show either “settled” which is best, or “charged off”, so try to get them to agree to “settled” at the beginning of your negotiations.

If you’re credit rating was previously shot to pieces then you won’t be very adversely affected, whereas if it was excellent, which is unlikely, then it will take a big hit.

The Negotiation Process

In spite of anything and everything that you might have heard or read to the contrary, credit card companies aren’t obliged to help you, and the best way to approach them is using a calm, confident, and upfront approach, and whatever else you do, never ever try to bully them.

You got yourself into this situation, so don’t expect the lender to be sympathetic towards you, because he won’t be. What you want will cost him a lot of money, and he’ll only agree because he sees no alternative.

The person on the other end of the phone hears lots of hard luck stories like yours all day long, so please spare him yours, because if you don’t he or she will simply mentally disconnect until you finish your tale of woe.

Don’t rush to play the bankruptcy card, because although it might force the lender into making some concessions, it will also totally change the mood from one of negotiation, to one of confrontation, and you’ll likely end up with less than you might have otherwise gotten.

The author of this article was a film producer, and award winning film sound editor for many years. He has a major interest and flare for economics, and one of his websites -> Free From Debts has a large number of extremely popular articles about the world’s economy in general, and debts, debt consolidation, debt settlement, and bankruptcy in particular.