Times are tough for all of us right now, and it’s especially tough for lenders. That’s good for borrowers. With the credit crisis, lender’s are in a tight spot and that’s why it may be the best time to negotiate your debt with them- ever!
According to the Federal Reserve, charge offs by credit card companies jumped 42% this year. Credit lenders don’t like to write off too much bad debt, so if you can convince them you will become part of that bad debt if they don’t work with you, it may give you the opportunity to start digging out of credit card debt and get back onto the road to positive net worth. Here’s a look at just how bad it is:
- According to the American Bankruptcy Institute, personal bankruptcies have also increased about 40% from last year.
- According to the Hope Now alliance of lenders and credit counselors, over 2.2 million homeowners are over 60 days late on their mortgage. One in six homeowners owes more than the house is worth.
- According to data from LPS Applied Analytics, every foreclosure is now a loss of 44% of the original amount of the loan. That’s a 29% increase from a year ago.
All of this means your lender is much more likely to forgive some of your debt, or decrease the interest rate than they were a year ago. Of course, you have to have the right amount of distress to qualify for the best deals: you will likely have to be struggling, but just enough that a change in terms will help you pay back more of the debt or pay it back sooner.
Still, you never know unless you try. 
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