September 9, 2007

Fear - the Negotiator's Tool or Nemesis

Fear is what terrorists use against large, organized, powerful foes. In earlier times in Chicago a mafia underling would walk into a local bar or restaurant and observe, "This place could have a fire." The owner would logically say, “No way, never had one.” The next day, after a fire broke out in the kitchen, the underling would return and say, “See, I could have helped you avoid that. A little insurance goes a long way.”

This intimidation forced many law abiding citizens to pay for protection from the Mafia.

In the 21st Century Muslim extremists are using the same concept. They are trying to invoke fear into the western population to advance their cause. They cannot hope to confront most of the world’s military power or even their own countries head on, so they resort to attacking the mass population in the name of Allah and their cause. If the masses become too fearful they will either promote aggressive retaliation or elect acquiescence candidates to avoid personal harm. Either way, the terrorist gains strength and power by usurping control of the population.

The best defense against a terrorist is to not change dramatically our daily routine, our perspective on life, and our willingness to do what we want to do. Add to this a little caution, some extra vigilance in being aware of what is going on around us, and not changing our basic beliefs will declaw the attempt of the terrorists to control us.

In a negotiation fear plays a large, strategic role in the outcome. Fear of failing, fear of the unknown, fear of not being helpful, there are many fears that can be used to advance a negotiator’s cause. One of the most powerful tactics that few think to use is the fear of not being helpful.

Everyone wants to think that they care about others and want to be liked. A professional and adept negotiator will take the time to build a strong relationship with his or her adversary before really getting to the task at hand. In today’s fast paced world, too little time is spent in this fashion. As a result, many negotiating successes are lost because people are too impatient, to hurried and dismissive of the value of building relationships.

How does fear serve the negotiator in this context? By becoming a silent motivator to get the other person to do something that he or she does not want to do. A sociopath has no regard for the feelings of others. He does not relate to others. The rest of us do. In the business environment, many try to be non-emotional. They get away with this sociopathic approach if the other person does not build a personal “bridge”. Bank lending officers, credit managers, retail clerks all fit this mold. But who gets the best service at a store? Not the dour patron but the person who reaches out with a smile or kind remark. That is the person the clerk relates to and gives just a little extra. Why? Not because they have to but because they want to. This is a basic demonstration of the application of fear in a negotiation. The customer who has made the effort to build a personal bridge to the clerk has subliminally made that person concerned that they do not want to offend the person in some way. So they try to accommodate the patron.

Posted by Bill at 11:44 AM | Comments (0)

September 28, 2005

Debt Restructuring Before Buying a New Home

The most important aspect of personal debt restructuring is to ask before you get in too deep and before they start chasing you to pay.

Nell Henderson, Washington Post Staff Writer, Tuesday, September 27, 2005 wrote an article, "Concerns Raised as Home Sales, Prices Rise Again". In the article he notes concerns about the high cost of real estate and the risk lenders are taking by granting creative financing to facilitate sales at such elevated prices. "One driver behind price appreciation, Greenspan said, is the popularity of new types of mortgages that enable many borrowers to buy houses at prices they could otherwise not afford -- and that may be hard for some borrowers to repay if interest rates rise and home prices stabilize or fall.".

The temptation of getting into the runaway housing market is understandable. Simple savings accounts are returning less than 2% per year. CDs and bonds are not much better. "Safe" funds are yielding 5% pre-tax. And real estate is surging, offering both equity appreciation and tax protection. However, if you are in debt, it's important to make sure you restructure it and consolidate it before taking the leap into the housing market.

So many see the risk of taking on a house that is beyond their means as worth taking in order to create value and build a financially secure future. The problem is that the lenders, once predominantly banks prone to conservative lending standards, now include pension funds, insurance companies and other investment entities eager to place loans to keep their money working. It is not the lenders who will be hurt. It is the borrower who gets burned. Bankruptcy laws are changing in October and it will no longer be convenient to file bankruptcy to avoid creditors. Individuals, once protected from forced liquidations, will find that to be the norm rather than the exception. So it is more important than ever to learn how to renegotiate or restructure debt before one is forced into bankruptcy court.

Renegotiating debt is best done before you are too delinquent. With a solid payment history with your lenders you are more likely to find them willing to work with you when you approach them. Debt can be restructured a number of ways but there are some cardinal rules to observe so that you preserve your ability to control the restructuring of your debt.

-Do not wait until the debt has been turned over to a collection agency. By then it is too late to deal with the original issuers of the debt who might have an interest in helping you. They have discounted and sold off your debt when it is turned over to collections. That means they have written off what they would have conceded to you to a third party. The third party's only motivation is to make money off your bad situation.

-Before you seek debt relief, develop a personal budget that is viable and a plan which you can handle. Now you are ready to lift the telephone and call for help.

-Don't be afraid to ask for help. Advising the lender of a looming problem allows them to help you avoid it becoming a major issue.

-Be persistent. "No" is easy for creditors to say. You will hear it a lot. Call back and try to get to someone else. Talk to the same person repeatedly until they begin to get to know you and start wanting to help you.

-Be pleasant. You need to develop a rapport with the other person so they want to help you. Getting mad often makes things worse.
Debt restructuring is a basic form of negotiation. You have a need.

The lender also has a need. You have a solution to offer. They have to be convinced to listen to you. You have to convince them of your sincerity and why they should gamble with your plan. Don't ask for a hand out. Ask for approval of a specific plan.

A plan that works for you should give them something as well. The two primary commodities are time, money and your credit rating.

-If you have money, but not enough, explain your situation and offer to pay off the debt at a discount. If they sell off your debt they will be lucky to get 50 cents on the dollar. Obviously you should be able to settle between 50% and 100%.

-If you offer to pay the full amount, but over time, you will be saving a lot in money and keep you credit rating from being impacted.

-Be sure to negotiate the interest. It does you no good to extend your payment period if you are also going to be paying a higher interest rate. Interest rates are negotiable.

-Finally, require that the lender not place this delinquency or restructuring of the loan on your credit report.

The most important aspect of personal debt restructuring is to ask before you get in too deep and before they start chasing you to pay. A good customer's case always sounds better than a plea from a habitual problem customer.

By successfully restructuring your debt you will have protected your credit rating for forays into the housing market.

Posted by Bill at 12:41 PM | Comments (0)

September 11, 2005

Credit Card Debt Negotiation

There are big changes in the bankruptcy law coming in October 2005 according to Attorney Albin Renauer. He suggests if you're thinking of filing for bankruptcy, do it now. It will be much harder to qualify after October 17th. The credit card industry has finally gotten the bankruptcy law "reform" changes they've been lobbying for. Signed into law on April 20, 2005, the new law will take effect on October 17, 2005. It has significant impact on consumer debt and offers fewer protections from collection efforts than the prior law.

America is swimming in debt. Credit card debt, mortgage debt, car loans, variable mortgages, lines of credit, consumer debt, business leveraging, corporate debt, and state and federal debt. It all adds up to the fact that we are living beyond our means. When there is a disruption in our income, that debt which was once a means of living the good life becomes the albatross that threatens the ship. Love it or hate it, we seem to be a society that has to have it.

What can you do about personal debt when it becomes too much to handle? A lot.

Debt can be restructured a number of ways but there are some cardinal rules to observe so that you preserve your ability to control the restructuring of your debt.

1. Never wait until the debt has been turned over to a collection agency. By then it is too late to deal with the original issuers of the debt who might have an interest in helping you. They have discounted and sold off your debt when it is turned over to collections. That means they have written off what they would have conceded to you to a third party. The third party's only motivation is to make money off your bad situation. You are now truly dealing with the devil!

2. Before you seek debt relief, develop a personal budget that is viable and a plan which you can handle. Now you are ready to lift the telephone and call for help.

3. Don't be afraid to ask for help. Advising the lender of a looming problem allows them to help you avoid it becoming a major issue. Trying to avoid the lender only puts you on the defensive with nowhere to go.

4. Seek to be transferred as high in the organization as you can. You want to be at a level where the person is allowed to think and has the authority to grant you a concession or revised payment schedule.

5. Be persistent. No is easy to say. You will hear it a lot. Call back and try to get to someone else. Talk to the same person repeatedly until they begin to get to know you and start wanting to help you.

6. Be pleasant. You need to develop a rapport with the other person so they want to help you. Getting mad only seals your fate.

Credit card debt restructuring is basic negotiations. You have a need. You have a solution to offer. The lender also has a need. They have to be convinced to listen to you. You have to convince them of your sincerity and why they should consider your plan. Don't ask for a handout. Ask for approval of a specific plan. A plan that works for you and gives them something they can accept. The two primary commodities are time and money. If you have money, but not enough, explain your situation and offer to pay off the debt at a discount. 30% to 40% is not an unusual discount. If they sell off your debt they will be lucky to get 50 cents on the dollar. If you offer to pay the full amount, but over time, interest free, you will be saving a lot in money and keep you credit rating from being impacted.

The most important aspect of personal credit card debt restructuring is to ask before you get in too deep. And ask before they start chasing you to pay. A good customer's case always sounds better than a plea from a habitual problem customer.

Posted by Bill at 6:40 PM | Comments (1)