Tips for Negotiating with Creditors

I’ve helped hundreds of clients negotiate. I’ve negotiated residential and commercial real estate contracts, residential and commercial leases, Mediations, credit card debt, medical debt, student loan debt, secured debt, unsecured debt, deficiency obligations, pretty much every type of debt. I’ve negotiated court settlements and other agreements that involved something other than money.

Over the years, I’ve learned a few things about negotiation from experience, from watching other attorneys, and from watching my father (a CPA who could have easily been an attorney). My negotiation lessons included:

Try to understand what the other side wants. Sometimes the party you’re negotiating with is interested in something other than what they are negotiating for, even if it is a creditor that you think is interested in money.  Maybe they need to meet a quota of collections and getting something from you, other than the entire balance, will help them? I’ve been involved in negotiations where one side simply wants an apology. If you can understand what the other side wants, and that is something you can part with (like an apology) you may come to a quick and easy resolution.

Never make the first offer. You can almost always expect that the first offer will be countered, and you’ve given away some leverage. By making the first offer, you may also risk offering something so extreme that you upset the other side (which sometimes may not be a bad strategy). On the other hand, if the other side accepts your first offer, then your first offer was too lenient; you could have received more in your favor. If you have to make the first offer, maybe your first offer includes terms other than or in addition to money (see above).  Certainly, as the plaintiff in a lawsuit, you’ve made the first offer – the filing of the lawsuit itself.

Don’t bluff unless absolutely necessary.  If you get a reputation for bluffing, you will be ineffective as a negotiator.  Only bluff if or when it is absolutely necessary. Obviously, don’t tell the other side you were bluffing. If you bluff too often, you may be labeled untruthful, unethical, or unwilling to compromise, which will destroy your ability to negotiate. However, sometimes, I’ve advised clients to include “red herrings” in their negotiations, which gives the other side something to eliminate (and feel like they’ve accomplished something) and losing those “red herrings” has no negative impact on your side.

If you’ve got a strong position, let the other side know. One of my mentors once taught me: “Those who have the facts on their side pound on the facts.  Those who have the law on their side pound on the law.  Those who have neither pound on the table.” Be aware of when you may be in a strong negotiation position because you have the facts or the law on your side, or some other circumstance in your favor.  Also be aware when the other side is “pounding on the table” because that may be a sign that they are bluffing.

Be honest, and avoid over-disclosure.  Along with some of the other points made above, it is possible to be honest and bluff at the same time.  It is also possible to phrase the facts in a light favorable to you and contrary to the other side (this is what trial lawyers get paid to do every day).  Again, however, you want to avoid lying, avoid a perception or reputation of being dishonest.  At the same time, you don’t need to provide extraneous information unless: (1) it helps your bargaining position, or (2) omitting that information would be in the nature of a lie by omission.  Otherwise avoid over-disclosure, which may provide the other side with information they can use to their advantage or against you in negotiations.

Be willing to walk away. One of the best lessons I learned in negotiation was from my dad and in the context of negotiating for a car, but I’ve seen it work in legal negotiations as well.  If the other side believes that you’re willing to end negotiations and walk away, that may be the thing that causes them to give that last little bit to get to a settlement, rather than risk losing the deal over something that may seem (to them) trivial or immaterial.  However, you must be willing to walk away – otherwise you’re just bluffing, which may be a good strategy (see above) if you use it wisely (like using a trick play in football).

Many times, I’ve told clients that “you may not walk away happy from your negotiations, but at least you’ll walk away.” What are some of your best negotiation strategies?

If you have questions about negotiation, mediation or debt settlement, please contact us to schedule a free initial consultation to discuss your options at 727-261-0224 or email me directly at shawn@yesnerlaw.com. Please also subscribe to the Crushing Debt Podcast, on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics.

Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Clearwater-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Clearwater, Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.