Debt Settlement Negotiations

Having a lot of debt is not a trivial matter. In addition to having to work harder physically, you are also required to be stronger in terms of emotional regulation. Because of this debt, many people fall into anxiety which leads to stress and even depression. When you start to feel signs of stress from thinking about debt, then be careful and find ways to overcome it. One way to overcome this is to conduct debt settlement negotiations.

debt settlement negotiations
Debt settlement negotiations (Picture:

Based on the results of research by Fitch et al (2007) in the journal Debt and mental Health, it is stated that people who are in debt have a greater chance of contracting mental illness than people who do not have debt problems.

How To Negotiate A Debt Settlement

The effect given to the economic sector during the spread of Covid-19 is reminiscent of the state of the economic crisis in 1998. The economic situation continues to deteriorate, and the cash flow of each entrepreneur does not improve, many business sectors then choose to take alternative paths such as laying off some workers to keep cash flow running, and not even a few stop their business activities.

Not to mention if there is a debt bill that is due at the same time as this.

In connection with this, there are tips for negotiating during the debt settlement process, namely:

1. Calm

The debtors must remain calm during the negotiation process. Controlling emotions is very important here because if the debtor negotiates with bad emotions, the results will not be good. Excessive panic can also make it easier for the debtor to be manipulated.

2. Plan

The application for restructuring made by the debtor must be followed by good planning. In some cases, the creditor or third party who will bear the debtor's debt with the refinancing mechanism will see the planning program proposed by the debtor as good faith.

3. Risk Assessment

This risk assessment relates to the planning program proposed by the previous debtor. Here the debtor must explain well the risks that may occur in the future from the implementation of the plan.

4. Transparency and Honesty

Transparency and honesty on the part of the debtor are very necessary to facilitate the process of implementing negotiations. This transparency and honesty are very important because the results will be a consideration for creditors to see if the debtor can pay off his obligations in the future.

5. Orientation to Solutions

This orientation to solutions often becomes a polemic during the negotiation process. There are some cases where the debtor has already surrendered and vice versa where the creditor is too aggressive to liquidate the debtor's assets. To solve the problem of debts between debtors and creditors, it is better for both parties to be solution-oriented, so that there will be no manipulation and intimidation.

6. Appropriate Party or Representative

In order not to cause manipulation and intimidation by both parties, each debtor and creditor must apply for the right representative or already have expertise in the field of repayment of debts to achieve common goals.

7. Record and Archive

In the process of negotiating debt-receivables, both on the part of the debtor and the creditor it is very important to make the Minutes of Meeting which this record must be known to both parties. One of the easiest forms to do is by signing the parties to the record of the negotiation process.

The minutes of this Meeting are very important because the final result of the negotiations is a new agreement that before being signed, the parties must first review whether their views are appropriate.

8. Consistency

The consistency referred to here is that if there is an agreement, the parties must continue to carry out their obligations by what is agreed upon.

9. Deal

About the minutes of the meeting and the agreement made as a mutual agreement, the parties must ensure that they have the same view of a matter agreed upon.

10. Assertive

During the negotiation process, the parties are expected to communicate firmly while still respecting the opposing party's opinion. There should be no element of intimidation or manipulativeness.

11. Good Faith

Although the benchmark of good faith is very difficult to prove, at least the parties work together and consistently to resolve the problem they are facing.

Hopefully, this information about "Debt Settlement Negotiations" will be useful in the debt settlement process.


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