Don’t attempt to negotiate debt forgiveness in a workout situation. There is a better strategy.

The basic principal controlling a workout settlement is the debtor has no ability to pay as agreed…. thus the creditor is willing to accept less then what is owed. Makes sense.

Integrity and credibility is critical in such a situation. For a workout to succeed the creditor must believe the debtor cannot pay as agreed and thus it is worth it to settle for less.

Here lays the issue. Most business men have a misconception that it is all about negotiating a conclusion, offering less, coming up with more and settling in the middle somewhere. NOT SO!

Here is the deal. If you offer $100.00 and then with objection from your creditor come up to $150.00, this implies you were lying, and had more to offer and was trying to beat the creditor and get away with less then what was possible despite the fact that you are looking to pay less then owed, debt forgiveness.

The only honorable and successful approach is to offer exactly as much as you possibly can and ask forgiveness for the rest. For this to work the offer needs to be as much as it can be. Thus there should be no negotiating, since you made the best possible offer possible. So when pressed for more the answer needs to be, ‘I have offered you as much as there is available I can do no better’. This is credible, has integrity and if believable will succeed and be accepted.

The moment you offer more, as in a negotiation, you are then demonstrating that you are not acting out of truth and with integrity and you really did have more to offer and were holding despite your plea for forgiveness, thus, anything you then say is neither credible or honest or believable and the workout should and will fail.

Do not expect the bank to follow these rules as they may want to enter into a negotiation and counter offer with a higher but still compromised payoff amount. You must hold your position and maintain the integrity of your position” I already offered you all I have to give, I am not negotiating I have nothing more to negotiate with”, you explain to your creditor.

Make your best offer that is real and believable…. and stand on it. It is what it is and you can do no more. That is your context and the basic reality in any workout. It is not a negotiated conclusion.