How to Negotiate Bills During the COVID-19 Pandemic
Are you worried about paying your rent, mortgage, utility bills or other expenses during the pandemic?
1. Choose to communicate.
You might be tempted to ignore the bills you can’t pay. But that won’t make them go away, and you might end up facing a lawsuit. What should you do instead? Negotiate with the person you owe money to (also called your creditor) in order to come up with a solution that’s workable for everyone.
Negotiating means communicating with another person about a problem or situation to try to work out a solution that is acceptable to both people. You might negotiate with your landlord, bank, utility company, or even a relative who loaned you money over how to pay the money you owe.
2. Think about everyone's perspective.
Before trying to negotiate, take a few moments to consider not only your own perspective and concerns but also those of your creditor.
Consider your concerns:
Has your income been reduced because you lost your job due to COVID-19? Are you faced with difficult choices on how to use your limited funds to cover rent, groceries, medical bills, and other essentials? Has the crisis created unexpected expenses, such as caring for an ill relative?Consider your creditor’s concerns:
What do you think is important to your creditor? For example, if your creditor is your landlord, does he rely on your rent money to cover his mortgage on the apartment building or pay for maintenance of the property? Is he facing unanticipated expenses, such as buying protective gear for his employees? Is he losing income due to apartments he can’t rent during the pandemic?Considering the creditor’s perspective, in addition to your own, will help you find common ground and have a more productive conversation.
3. Do your homework.
Before you talk to your creditor, reach out to third parties–nonprofits, family members, former employers, banks, or government agencies–to see what programs, services, or resources might be available to help you with these expenses and to offer financial relief to your creditor.
4. Consider what might happen if you can't come to an agreement.
Before you negotiate, consider what might happen if you’re not able to work out an agreement with your creditor.
Would your creditor file a lawsuit? Many courts aren’t fully operational right now, but if a lawsuit does eventually result, it could be a lose/lose situation for both of you. Going to court wastes precious time, money, and energy, and even if your creditor wins a judgment against you, they might not be able to collect anything if you don’t have the funds to pay.
Think about how you might convince your creditor that crafting some sort of plan to put in place now is a better solution than other alternatives, like a future lawsuit.
5. Ready to negotiate? Seek to create a realistic and flexible plan.
You’re now ready to talk to your creditor about your bills. You’ve thought about the situation from both parties’ perspectives, done your research, and decided that it would be best to come up with a plan that’s workable for everyone. So, how do you go about this?
Get in touch with your creditor and ask to have a conversation about your bills.Start negotiations by acknowledging that these are challenging times for everyone and that both you and your creditor are probably angry, frustrated, and worried about the pandemic.
Explain your situation and show your creditor that you understand their situation.You might then simply ask what your creditor would be willing to do for you during this difficult period. Sometimes making a simple, straightforward request for assistance is all it takes to start a discussion about possible solutions.
If the plan your creditor proposes doesn’t work for you, don't be afraid to propose your own ideas.Everyone’s situation is different, and it sometimes takes talking through a lot of details to come up with a workable solution. Be sure to remain calm and polite throughout the discussion.
Make sure that any plan you make is realistic. For example, your creditor might say that due to your financial hardships, they will not expect you to make any payments for the next three months, but they expect you to make a lump sum payment at the end of that period. Before you agree to this proposal, think long and hard about whether this arrangement is doable for you.
Build some flexibility into your agreement. The COVID-19 situation is still unfolding, and its effects on our world are still changing. Both you and your creditor should agree that your plan might need to be modified down the road.