How to negotiate with your creditors

Are you finding yourself with significant debt with no alternatives to decreasing this burden? If so, you have options.

Contact a debt counsellor

The first step in your financial plan to recovery is to contact a registered Debt counsellor who can negotiate with your creditors to extend the terms of your loan, thus reducing the monthly repayment and relieving cash flow.

Creditors want you to pay

Contrary to what you may believe, creditors do not want you defaulting on your payments any more than you do. Therefore most creditors are actually willing to negotiate your terms of payment in order for you to not fall behind on these. This does not mean they are guaranteed to agree to this, but you will not know until you try.

Being 100% honest about your debt counsellor

It is essential to be brutally honest with your debt counsellor about what you can reasonably afford to pay each month. Make sure that you contact your counsellor first before you start defaulting on your payments. The counsellor will map out your monthly budget so that you are certain what you can afford and show this to your creditors so that they build confidence in you, and they believe you are sincere about getting your debts repaid.

The benefits of debt counselling 

By agreeing to pay smaller amounts per month over a longer period of time creates a win-win situation for both parties. Your credit record is untainted — should you stick to your budget and make good on your obligations — and your creditors receive what is due to them.

Trying to negotiate with a debt collection agency may be more difficult however. Remember that their job is solely to gather your debt, but this is still possible. There tactics may be more aggressive and it is important to know your rights.

Here are a few guidelines according to the South African Council for Debt Collectors:

Debt collectors may NOT:

• Call you on a Sunday.
• Contact your employer, friends or relatives about your debts.
• Contact you persistently over a very short period of time.
• Threaten your arrest or reputation.

DebtBusters can help you if you’re struggling to pay off your debt. Speak to a consultant at info@debtbusters.co.za. Alternatively, you can call us on 086 999 0606.

Frequently Asked Questions

Q: How do I negotiate lower repayments with my creditors in South Africa?

A: DebtBusters recommends contacting a registered debt counsellor before defaulting. The counsellor maps a realistic monthly budget then negotiates with creditors on your behalf to extend the loan term and lower the monthly instalment. Creditors usually agree because they prefer smaller payments over a longer period to outright defaults — provided you are honest about what you can actually afford.

Q: What are debt collectors not allowed to do in South Africa?

A: Under the South African Council for Debt Collectors rules, debt collectors may NOT call you on a Sunday, contact your employer, friends or relatives about your debt, contact you persistently over a very short period, or threaten you with arrest or damage to your reputation. DebtBusters notes that knowing these rights matters because collectors' tactics tend to be more aggressive than original creditors'.

Q: Should I talk to my creditors before or after I miss a payment?

A: Before. DebtBusters advises engaging a registered debt counsellor before any default — approaching creditors early with a budgeted, honest offer signals good faith and dramatically improves the chance they will renegotiate terms. Waiting until you have defaulted weakens your position, hurts your credit record, and can trigger Section 129 letters, judgments or garnishee orders under the National Credit Act.