If you have debt, you're behind on paying; you may need help from your lender to get back on track. Negotiating a payment plan could be an option, and some creditors are willing to do so. If you have a debt collector contacting you regarding payment, a debt payment plan may also be an option. Here's what you need to know before you move forward.

Understanding Your Debt

The first step is to understand your debt.

• How much do you owe?
• What are the chances you will be able to repay your debt over the next few years?
• Are you likely to default on the debt altogether?
• How much could you pay monthly if your existing payment is too high?
• How could you reduce your other expenses to put more toward your debt?

Debt collectors want to understand the whole picture. Can you make any payment, and if so, how much?

It's also important to consider what your debt is. For example, if you borrowed $500 but now owe $2000, that's a lot of fees and interest on the original borrowed amount. They may be willing to reduce some of those fees to get you to pay something back.

Common Payment Plan Options

The key to a debt payment plan is knowing that most lenders can work with you flexibly. It would help if you discussed these options.

• Partial repayment. In this type of payment plan, you'll pay most of what you owe, but the debt collector agrees to less than the total of what you owe. They may agree to a settlement of 25 to 50 cents on every dollar (for example) though it is more common for it to be closer to 75.
• Full payment plan. In this payment plan, you reorganize your debt to make it easier to get caught up, but you still pay all of what you owe. The lender may agree to stop adding interest and fees at the same rate or be willing to work out a lower monthly payment that better meets your budget.

Pros and Cons of Payment Plan Options

When considering whether or not you should invest in a payment plan with a debt collector or take other steps, realize both the pros and cons.

Pros:

• A payment plan may make catching up on your debt more manageable. If you cannot do so at the current monthly payment but need some help reorganizing that debt, this may work well for you.
• If you owe a debt, such as a medical bill, but cannot pay the entire balance, a payment plan may make it possible for you to pay those bills over time.
• Depending on the plan's circumstances, payment plans may lower what you owe or have to repay.

Cons:

• Not all debt collectors will agree to work with you. That is especially true if they believe you have the means to repay the debt owed in full.
• You may be required to close the account or be unable to use the service you owe money to until you pay the debt in full.
• Payment plans are not helpful if you cannot pay the debt due to job loss or other reasons. In this case, you may need to consider selling assets or bankruptcy.

Protecting Your Rights

Consumers have rights when it comes to debt collection. The Consumer Financial Protection Bureau offers significant insight into what your rights are. Some of them include the following:

• You have the right to know why a debt collector is calling you.
• Debt collectors cannot use any language that they are a debt collector on an envelope or send correspondence on a postcard.
• They cannot misrepresent the debt, including the amount owed, in any way.
• Debt collectors cannot make threats to you.
• They cannot tell others who answer the phone about your debt obligations.

Negotiating Your Plan

Realize that debt collectors aim to collect at least some of what you owe in every situation. That may allow you to settle the debt for less than what you owe. Here are some tips to help you to negotiate a plan that works for you.

• Be open and honest about what you believe you can pay monthly. Don't over-promise. Instead, make sure that what you do promise is something you can consistently pay.
• If you have some extra money now, ask the debt collector to settle the debt in total if you pay a certain amount now. That may be just 75 cents on the dollar, but it saves you some money.
• Communicate with the debt collector about the limitations you have. For example, if they know you're ill, they may be more willing to work with you.

Seeking Professional Help

It is best to turn to a professional for help with debt collection actions in many situations. If you feel pressured or simply cannot pay your debt, and debt collectors are harassing you, seek professional help.

It is also essential to know that organizations can help you work out payment plans with the lenders you owe money. That means they can help you avoid some of the stress of trying to navigate this process on your own.