Do Not Ask The Bank If They Are Willing To Reduce Your Loan

You cannot ask the bank if they are willing to reduce your loan. In fact, you really cannot ask any creditor to reduce your debt. It’s a failing strategy, it will not work and yet it’s the most common approach. It’s as if borrowers believe that the banks want to be fair and will deal even-handedly and respond to such an inquiry with a reasonable compromise. What a silly thought.

You are asking the bank to bid against themselves and they will not do it.

Additionally, banks simply will not reduce principal, so do not bother to ask. It makes no sense and there is little reason for them to fall into this strategy. You will get a laugh and a rejection. They expect every penny of a loan to be repaid. Of course they do, that is the deal. They may modify, but that is not the issue. Debt reduction is the question and banks will not willingly participate in a unilateral reduction of debt to satisfy your cash flow requirements.

This same principal applies to any workout, however, vendors or any non-bank creditor may negotiate against themselves. But, there is a better way. The best way to negotiate a discount of principle with a bank is with a specific bona fide offer in writing with a time  specific to close. This results in a response and a resolution. This is what works.

There is much more required – more specific information and an effective presentation – but the important point is a specific Offer in Compromise works while a request to reduce your debt does not.