What is the best way to negotiate a settlement?

Use positive, respectful and generous negotiating behavior to generate it in return and facilitate the influence of the other party to accept settlement proposals. Express a desire to meet the needs of the opposition so that they can return the favor by meeting their needs. Conversations to reach agreement or mediation can give both parties an opportunity to talk about their needs and concerns. Negotiation can pose difficult and emotional problems.

Keeping the conversation polite and respectful will improve your chances of reaching an agreement. Don't lose sight of the amount you can realistically pay. Start by going down and try to work towards a midpoint. If you know that you can only pay 50% of your original debt, try to offer around 30%.

Avoid agreeing to pay an amount you can't afford. A creditor can accept between 40% and 50% of the debt you owe, but it could go up to 80%. The original creditor is likely looking for a higher repayment rate. If your debt is already with a debt collector, you may be more willing to accept a smaller amount.

Debt settlement can damage your credit rating by more than 100 points, and the settlement will remain on your credit report for seven years. Add this to any delinquent debt you already have, and your credit can take a long time to recover. Reaching an out-of-court settlement can remove any number of barriers to negotiation. The drawbacks of involving lawyers in your dispute and preparing for a lawsuit can be considerable.

Understanding how to organize meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real-world example of how seating arrangements can influence a negotiator's success. This discussion was conducted at the 3-day executive education workshop for senior executives in the Harvard Law School Negotiation Program. If you decide to negotiate a DIY debt agreement, you don't give up your personal control over the timing of the process.

While negotiation (whether through lawyers, mediators, or on your own) should lead to better outcomes for litigants in most cases, litigation may be preferable in the following situations, writes Jeffrey R. Telling creditors that you have money saved to settle debt can give you a opportunity advantage in negotiating with them. Negotiations don't have to take place face-to-face, but often the most successful way to negotiate is in person. With do-it-yourself debt settlement, you negotiate directly with your creditors in an effort to settle your debt for less than you originally owed.

It is also important to encourage the other party to open up about their interests and to take those interests into account when negotiating. Before dealing with your dispute jointly, negotiate key elements of the process with your counterparty, such as how you will choose experts and whether lawyers will participate in the negotiations. In other words, you won't have a debt settlement professional or anyone else to negotiate on your behalf. However, you will begin your negotiations by offering to pay significantly less than 50%, so that you and the creditor have room to negotiate.

In any case, your first lump-sum offer should be well below the 40% to 50% range to make room for negotiation.