Turning A Workout No Into A Yes

Asking a creditor if they will discount a debt is bound to get a negative response. “Of course we will not accept less. What a silly question.” This is likely to be the response, especially from bankers who think their collateral position is adequate to protect their debt. Frankly, what else would you expect? It’s a silly question and demonstrates a lack of understanding of the creditor’s position. After all, you borrowed the money or received credit for a purchase, of course you should pay it all back. They are thinking that’s how the system works and how could you be thinking anything else?

Another way they say “no” is through rejection an offer to pay with a deep discount, responding with a counteroffer of an insignificant discount and a statement that this is all they will possibly and reluctantly allow. This is typical of credit card workouts where they will offer you a 15%-30% discount and will tell you they can go no lower. Of course, they will go a lot lower. You just need to work them harder and smarter and eventually you can get them down to a 75% discount or more.

The first rule is to not believe a word they say. Of course they will accept a deep discount, the real issue is how effective the presentation is. Better stated, how convincing are the facts provided that will support a positive conclusion to a workout request along the lines you can afford? The second rule is that you take control of the situation, forcing the banker or creditor to deal with your reality as opposed to them forcing you to deal with theirs. If they are required to accommodate your plan then you have positioned yourself for a successful conclusion.

Remember the issue you must overcome; before a workout negotiation can be commenced, is it the creditor’s understanding and belief that you owe the money and are defenseless to prevent their collection making negotiation a useless endeavor? Presumably they have adequate collateral if it’s a secured loan, so, why negotiate?

It’s a great question that requires a better answer and this is the nexus of a workout. The reason the creditor must take less is what your workout is all about. Without a good answer to this you are sunk. If the answer is credible, believable, and supportable, “no” turns to “yes”. Turning a “no” into a “yes” is not based on effective negotiation but rather on effective preparation and presentation. If a reasonable workout proposal is presented along with the answer, one that makes sense and is supported by the story, you are on your way to turning a “no” to a “yes”. I like to say–and I believe–that there really should not be a negotiation at all, but a presentation of the most that can be paid and the reasons the creditor should accept this as the only possible conclusion and therefore the best conclusion for them. If you can accomplish this you will achieve your objective–the best possible workout conclusion you can achieve.