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DEBT NEGOTIATIONS
What is your BATNA: Best alternative to a negotiated agreement? An example of how to successfully negotiate with your creditor.

Whether you realize it or not, most of us use negotiations in our daily life. From dealing with the kids, employers' or your neighbor, you are a negotiator in the best sense. You negotiate everyday and don't even realize it. Parents are great negotiators because of their kids. Kids constantly question your decision and you always come up with a good answer don't you? One of the most important factors in debt negotiations is the ability to communicate with others on such a level that wins the opponent over without their ever realizing it. You need and want to be that good!

You can do hard negotiations or soft negotiations but why not use the most successful negotiations developed by Harvard Negotiations Project called Principled Negotiations. The premise behind this type of negotiations is that it is neither hard or soft but a combo of both. This type of negotiations is excellent because you negotiate on merit rather than position. Instead of trying to beat down the other side, you simply find merit gains for both sides rather than focusing on haggling. Many great debt negotiators use this system and are quite successful.

Using fair standards, independent of each side, you begin to see negotiations in a new light. You are separating the people from the problem and focusing on your interest not position. Having a tug-a-war over a position rarely yields a positive result for you unless you are the more powerful one.  What we will use here today is principled negotiations with a creditor. Think it can't be done? Think again! We will be using a real settlement that we achieved using this exact negotiations tactic.

Not only did our negotiation tactics work but with one of the hardest in the creditor industry. Bank of America. They are infamous for completely ignoring other options even when it can be in their favor. They come from the old school and the upper management team can seem like old work horses rarely open minded. Our persistence and BATNA positioned us for a better deal for the client.

How it works
We will be negotiating for a repossession balance and a judgment that is due to be awarded in 11 days. Talk about time constraints and motive. This could really be a tough one. Bank of America not only sued Joe Consumer for a deficiency balance but they also took his car. Or did they?  As we begin negotiating this case, lets look at our merits of position. Technically, B of A seems to really have us. Why would they want to negotiate the deal? They already served him for a judgment, placed a REPO on his credit report and now are looking to painlessly collect the judgment because they have all the information where Joe Consumer works. 

So what can we possibly bring out to get their attention and cooperation? Well, for starters there is always some area for negotiations in just about any case, as tiny as it may seem, but this one did prove to be tough because the normal things a negotiator looked for were not there. The credit record was accurate. The statute of limitations on the debt was not expired, the debtor could not claim improper service of the impending judgment and B of A had their loan documents and collection records all in order. We could find no obvious violations of the debtors rights.  So we set out to navigate the case from the beginning. 

We know this was a repossession on a 1996 Ford Mustang. The debtor had a repo on his credit reports but we found the car still in his driveway. Why would B of A have a repo and a judgment but not the car? That would have been the first thing they picked up, don't you think? Well, the car was totaled. In a big crumpled ball in the driveway. Bank of America had been telling the debtor all along that they were going to come and get it but they never did. It remained in the driveway of his home for over a year.

Pouring over the facts with the debtor, we found that his auto insurance on the car had lapsed. Thus the reason why B of A was not paid off by the insurance. The balance on the loan was $9300.00 and there was no car insurance. Seems like the debtor made a huge mistake by not doing what he agreed to do which was to keep the car covered at all times to protect the banks interest. But he did keep it covered until it lapsed one time, a pure and simple oversight. How were we going to negotiate this with Bank of America. 

They really seem to have their ducks in a row and to anyone it would seem a cut n dry- debtor loses again case. Not so fast. We looked into the fact that B of A may not have acted reasonable in protecting their own interest. We contacted them and asked why B of A did not add forced insurance on the car? Anytime a bank gives a loan for an automobile they require full insurance. If it lapses, they tack on huge insurance fees also know as forced insurance or PMI.  B of A answered with, we don't like to pay for that coverage on loans under $10,000.00.

It is too costly for the loan so we don't do it!. Did B of A act reasonable in insuring that they protected their own security interest? We didn't think so and used that as our BATNA.  By using the inadequate protection, sheer persistence along with a financial statement regarding the debtors finances, we negotiated with B of A to accept 50% of the debt and cancel the court date which was only 11 days away! Had that judgment gone through then the debtor would have had a repo and a judgment on his credit for 7 years or more, both detrimental to his credit report and double the damage. Not to mention owning $9,000.00 + fees and collection costs.

B of A agreed to cancel the court date (set aside without prejudice), accept 50% of the debt and allow the debtor to keep the car to sale it for scrap which he did and made about 900.00. What was the motivating factor for B of A to negotiate? The fact that they did not follow adequate measures to protect their own security interest. They took no proactive steps to make sure the collateral stayed protected and probably new that we could make a big enough deal out of it to get the judge to reduce the judgment and not list it as a repo because it was in essence an unsecured loan by Bank of America's own doing.

No effort was taken to adequately protect their interest which resulted in an unsecured loan and nothing more. We searched for merit in this case, not who held the stronger position. We separated the bank from the facts and did not attack or belittle anyone. The negotiations went both smooth and friendly. The debtor paid 5500.00, got to sell the car for scrap and received proof that the judgment hearing was canceled. As for his credit report, he is fighting it as an inaccurate listing because the car was basically unsecured and not technically a repo. 

So far B of A has yet to contest the rating because the debtor stuck to his claim that the loan was nothing more than an unsecured loan because of B of A's lack of protecting their own interest through forced insurance. With that angle he may be able to reduce the rating to a settled loan and that's if B of A even verifies it, which so far they have not. If they do verify it, the debtor has the settled agreement in writing. The agreement states that the bank will cancel the judgment, take 50% as "Full Satisfaction" and allow him to keep the vehicle.

If you are deep in debt and hinging on bankruptcy, debt negotiations may be for you. It's a better option than debt management if you qualify. DN does require that you have some money set aside or the ability to borrow enough for a proposed settlement. DN can literally save your credit rating by avoiding a bankruptcy and a dragged out debt management plan where the success rate is less than 20%. Get a FREE debt negotiations consultation today and see if it works for you.

Note: If you want a professional debt negotiator please use the negotiation form and not our email address. Thank you.