How to Pay Off Your Retirement Debt by Negotiating with Your Creditors
If you are wondering how to pay off debt in retirement, you’re not alone. According to the latest statistics, people over 65 are struggling with mortgage, credit card and other debt like never before.
Worse, as their incomes fall, seniors are struggling to keep up with their debt payments, putting even more stress on their financial position, during an already difficult time.
There are many ways to deal with the problem of debt in retirement – ranging from making additional money to reducing your costs. In this article, I’d like to talk about a strategy that few people find the courage to pursue – negotiating with creditors.
I want to say right up front that I am not a financial expert or credit councilor. If you are struggling with debt, you should definitely seek professional help. If you get stuck finding someone to help, check out this guide by the Federal Trade Commission.
That said, as the founder of Sixty and Me, I have heard dozens of stories from other women over 60, who have tackled their debt problems head on. Through these conversations, I have come across several tips for negotiating with creditors that you may find helpful. Here are the tips that they shared with me about how to pay off your debt in retirement faster by negotiating with your creditors.
Most people fail to negotiate a better arrangement with their creditors because they never try. Either they assume that there is no way that they will get a better deal, or they are too embarrassed or afraid to make the first move.
The first thing to realize is that you actually have a lot of power when you reach retirement. When you are in the workforce, you have a regular income and the ability to pay relatively high interest rates. In retirement, your financial situation changes, but, your debts don’t automatically adjust.
Think about it. The worst case scenario for both you and your creditors is if your debt becomes so overwhelming that you are forced to throw up your hands and declare bankruptcy. Neither of you wants this to happen.
So, see your debt as a problem to be solved with your creditors’ help and pick up the phone. You have absolutely nothing to be embarrassed about and everything to gain from having a conversation.
I’m not saying that you will receive a friendly response, or that you will get what you want immediately, but, one thing is for sure – if you don’t pick up the phone, nothing will change!
In the movies, negotiations are battles of will. Each participant stands on his side of the ring and throws punches until the other side gives in. Negotiations, in real life, are seldom like this – although it may feel this way if you are on the wrong side of a debt collection call.
The women over 60 that I talked to said that they had much more luck by being friendly and kind than by shouting. Don’t forget, everyone that you talk to has a grandmother. They may be incentivized to get the best deal for their company, but, they are still people.
Be firm and honest about your situation. Be willing to push back if you think that you can’t afford a particular “solution” that is being offered. But, also be friendly and make them understand that you are a real person and that you are trying to solve a problem with them.
Many people over 60 have trouble admitting that they have financial problems. Others feel that it is their “duty” to pay their debts, even if they can’t afford to. This is all well and good, but, as I mentioned before, nobody wins when you are struggling to make ends meet.
To be clear, you should never lie to your creditors. At the same time, you shouldn’t make your situation seem any rosier than it is. Be honest about how much money you have after paying for essentials each month. Explain that you are no longer working and that your financial situation has changed.
You would be surprised how many people are able to negotiate lower interest rates, or even reductions in their debt, just by being honest. Obviously, everyone’s situation is different, and there are no guarantees in life, but, when it comes to negotiating your debts in retirement, honesty really is the best policy!
Renegotiating your debt in retirement is possible, but, this doesn’t mean that it is fast or easy. In fact, I know women in the community who have been working on negotiating with their creditors for years.
Part of the challenge is that it may take several attempts to find someone who can help you. Don’t feel like the answer you get from the first person that you speak with is final. If you aren’t making progress, ask to speak to a supervisor.
If all else fails, politely end the conversation and call back another day. It may feel like everyone is operating from the same script, but, they usually have more discretion than they would like you to believe.
Don’t put too much pressure on yourself to solve your debt problems over night. Try to see this as a long-term process that will need to be solved collaboratively.
One of the reasons that people think that negotiating is stressful is that they go into it with an adversarial mindset. They imagine that there is a fixed pie on the table and that it is up to them to take as much of it as they can.
If you are in a super strong negotiating position, pushing the other party around can work. Negotiating your debts is seldom so simple.
Several women told me that they felt that the single biggest reason that they were able to reduce their debts was that they approached the problem collaboratively. They explained the situation and then asked for the person on the other end of the line to help to figure out a solution together.
Keep in mind that, just because a “solution” is collaborative, it doesn’t mean that it is “fair” or even “workable.” There is absolutely no rule that you need to accept the first offer. Feel free to use time to your advantage. That said, you have more to gain than lose when you bring someone to your side of the table.
I’d love to get your thoughts on this! Have you successfully renegotiated any debts in retirement? What advice would you offer to the other women in our community who may be struggling with their own financial situation? Please join the conversation and “like” and share this article to keep the discussion going.
Disclaimer: None of the information in this article should be considered financial advice. Everyone’s situation is different, so, please talk with your financial professional or a reputable credit counselling service before doing anything mentioned in this article.