negotiating tips for lowering debt?

[geronimotwo]

Negotiating better terms is fine, that's a legitimate attempt to find a mutually benefial solution to the problem while still living up to the obligation to repay the borrowed funds.  Negotiating a reduction of principal is trying to stick someone else with your debt.

Brad

i don't see the difference.  whether negotiating terms, or principle the bottom line is how much money is paid to the bank.  how is one a morality issue and not the other?  regardless, renegotiating a contract by two willing partners has nothing to do with morality, it is simply a business deal.  now if some of you take issue with my suggested negotiating strategies, i can accept that. 

[Balog]

i don't see the difference.  whether negotiating terms, or principle the bottom line is how much money is paid to the bank.  how is one a morality issue and not the other?  regardless, renegotiating a contract by two willing partners has nothing to do with morality, it is simply a business deal.  now if some of you take issue with my suggested negotiating strategies, i can accept that. 

You don't see a difference between "You gave me $10k at %x interest, I'm going to get a new loan at %Y interest" and "You gave me $10k, but I don't feel like paying that all off so how about you just take $5k and call it good?" If you lent someone $500, and they came back and said they could pay it all back, but hey would you take $200 instead would you be ok with that?

You're dealing with an entity that only considers the bottom line, not whether or not living up to it's promises is moral.   You should feel fine doing the same - crunch the numbers and proceed on that basis.

Negotiating debt, principle and all, is good business and banks do it all the time.

So your argument is: banks are immoral for doing X, therefor you can do it right back and it's ok? Two wrongs and all that...

[geronimotwo]

no, i don't see a difference.  if the total balance due for x principle at x % at the end of x years is x amount, whether the savings comes from principle or interest is irrelevent.  money saved is money saved.  again, the bank is a willing partner in these negotiations!

[Balog]

no, i don't see a difference.  if the total balance due for x principle at x % at the end of x years is x amount, whether the savings comes from principle or interest is irrelevent.  money saved is money saved.  again, the bank is a willing partner in these negotiations!

Right, you stop making payments and threaten to declare bankruptcy and the bank is a willing partner.

[cassandra and sara's daddy]

Right, you stop making payments and threaten to declare bankruptcy and the bank is a willing partner.

while i see your point and admire the morals and principles behind it my experience with dealing with banks and mortgage companies makes them the bottom of the moral food chain

[geronimotwo]

my friend just called me.  he was able to secure a loan for 9k at 5%.  after depositing these funds in his account, he called beneficial and spoke with a supervisor.  after they confirmed the funds were available, he suggested they that he could pay 8k to pay off the 15k+change he owed.  they accepted!!!  as stated by others it will be counted on his credit report as "settled" which is not the best, but he is happy as the proverbial clam to be out from under that interest load.

Right, you stop making payments and threaten to declare bankruptcy and the bank is a willing partner.

those were suggestions questioning what might work as leverage, and as i already pointed out i have no problem with anyone criticising them (in fact that is why they are posted here!) none of those fulcrums were used to get the above settlement.

[Brad Johnson]

my friend just called me.  he was able to secure a loan for 9k at 5%.  after depositing these funds in his account, he called beneficial and spoke with a supervisor.  after they confirmed the funds were available, he suggested they that he could pay 8k to pay off the 15k+change he owed.  they accepted!!!  as stated by others it will be counted on his credit report as "settled" which is not the best, but he is happy as the proverbial clam to be out from under that interest load.
 

 He's out from under THIS interest load.  That settlement just guaranteed that any future interest load, at least for the next 5-7 years, will be just as heinous.

Brad

[lupinus]

my friend just called me.  he was able to secure a loan for 9k at 5%.  after depositing these funds in his account, he called beneficial and spoke with a supervisor.  after they confirmed the funds were available, he suggested they that he could pay 8k to pay off the 15k+change he owed.  they accepted!!!  as stated by others it will be counted on his credit report as "settled" which is not the best, but he is happy as the proverbial clam to be out from under that interest load.

Wait until he needs another loan, then he will wish he had that interest rate back.

[cassandra and sara's daddy]

you'd be surprised   wait 2 years it gets better 5 lots better   7 meh

[Brad Johnson]

2 yrs nose clean = FHA Insured mortgage, but most other creditors still leery.  5 Yrs = conventional mortgage and most creditors not so leery, but still somewhat cautious.  7 yrs = most creditors satisfied that you're not going to be a repeat offender.

Brad

[cassandra and sara's daddy]

don't forget the ironic credit card approvals immediately after bankruptcy.  from the same companies you just defaulted on.  and the sly tactic of slipping a reaffirmation of the old debt into the agreement

[geronimotwo]

don't forget the ironic credit card approvals immediately after bankruptcy.  from the same companies you just defaulted on.  and the sly tactic of slipping a reaffirmation of the old debt into the agreement

likely on the 5th page of terms in the really small print section!

[cassandra and sara's daddy]

yup

[De Selby]

So your argument is: banks are immoral for doing X, therefor you can do it right back and it's ok? Two wrongs and all that...

No - my argument is that in a contract, either party can only expect to be bound as far as he binds himself.  Since banks absolutely do not consider contracts to be a moral issue, but rather a bottom line issue, it is only fair that people they deal with treat them the same way.

Contracts with any large business are about economic exchange, not morals.  The people you will deal with personally, nice as they are, do not act for themselves.

Now, if he had borrowed from a friend or someone else who loaned the money in his own right, and they had both established a personal relationship, a moral obligation would clearly attach.

It's a mistake to equate borrowing from the bank to borrowing from someone you personally know.  

[Brad Johnson]

It's a mistake to equate borrowing from the bank to borrowing from someone you personally know. 

No.  And not only no, but a vehement NO!!

An obligation is an obligation.  Conditionalizing the obligation to repay based on the lending party's identity is not only morally and ethically wrong, it's an inherent dishonesty with yourself about what an obligation really is.  It doesn't matter what the other party thinks, or who that party might be.  Huge multi-national corporation or the kid next door, if you agree to repay, you repay.  Period. To justify not repaying because the other party "doesn't care and it's nothing to them anyway" is self-justification for stealing.  If you're okay with that then maybe you need to have a long and very heart-felt talk with the person you stare at in the mirror every morning.

Brad

[De Selby]

It has nothing to do with identity - it has to do with business practice.  A bank can and does refuse to honor its commitments on the basis of financial advantage.  They make the choice on the basis of economic gain, and nothing else.

That is why it's fair to deal with them in the same way.  Not "because they can afford it" or for any other reason.

Contracting parties get partners who will reflect their behavior, and thats proper. If banks want people to make decisions on a moral basis, they should institute rules that require them to do the same. 

[Brad Johnson]

It has nothing to do with identity - it has to do with business practice.  A bank can and does refuse to honor its commitments on the basis of financial advantage.

At the risk of massive civil and criminal legal liability?  I don't think so.  Some banks may pull bonehead moves based on one division not knowing what the other is doing, or because one person got their panties in a wad or had some kind of personal power trip going.  But no corporation or business, bank or otherwise, will knowingly impelement procedures or policies that puts them in position where the legal ramifications FAR outweigh any financial gain.  Refusing to honor a commitment (i.e. Breach of Contract) does exactly that.  They may use terms within the contract to mitigate their risk, but that's a far cry from "refusing to honor its commitments on the basis of financial advantage".  Getting mad at them for using terms within the contract, the same terms EITHER party is open to use, is a sour-grapes sentiment at best.  It's a "lets get mad at Big Bank so we don't mind screwing them for a couple grand" sentiment.

If banks want people to make decisions on a moral basis, they should institute rules that require them to do the same.

Banks don't loan morality.  They loan money.  And they do so by contract, with terms spelled out (and regulated heavily by the fed for consumer protection purposes, by the way).  Those ARE the rules, and banks have to comply with them under a very real threat of stiff and severe criminal penalties and civil liabilities.  It's unfortunate that so many people seem to forget they actually SIGNED A CONTRACT when they borrowed money.  The bank is not "refusing to honor their commitment" when they expect people to pay, they are simply going by the letter of the contract signed BY THE BORROWER.  If they borrower doesn't like it, they could always go to a loan shark.  No contracts to bother with at all.  You can even refuse to pay, getting all huffy and adopting the "I'm just not gonna pay because I don't think it's fair" attitude and not have to worry about a lien on your property or the police making an official visit.  Of course, you may wake up some morning staring at the underside of the lake...

Brad

[geronimotwo]

No.  And not only no, but a vehement NO!!

An obligation is an obligation.  Conditionalizing the obligation to repay based on the lending party's identity is not only morally and ethically wrong, it's an inherent dishonesty with yourself about what an obligation really is.  It doesn't matter what the other party thinks, or who that party might be.  Huge multi-national corporation or the kid next door, if you agree to repay, you repay.  Period. To justify not repaying because the other party "doesn't care and it's nothing to them anyway" is self-justification for stealing.  If you're okay with that then maybe you need to have a long and very heart-felt talk with the person you stare at in the mirror every morning.

Brad

brad, i agree with your commitment to an obligation, but, i think if most of us were put in the position where we could only pay back the bank or the friends loan we would pay back the friend before the bank.

[Brad Johnson]

If you're to a point where you're borrowing money from both, there's a much more fundamental issue of personal responsibility and fiscal restraint needs be addressed.

Brad

[geronimotwo]

^^^agreed