Is debt negotiation bad?

Is debt negotiation bad? N, not really. Negotiating debts is an integral part of the inception of all debts. Once agreed, the terms included remain set in most circumstances, yet today, refinancing has grown in popularity to the point that all astute business borrowers should request a rate adjustment when interest drops. Similarly, when homeowners refinance mortgages, why not ask the current lender to commit to a new, lower fixed rate equal to the best offer? Many mortgage lenders gladly drop their rates rather than losing a performing loan.

Workout Situations

Small business profitability is notoriously volatile. Most lenders expect their small business borrowers to experience periods of prosperity during which high interest loans are paid off early, and periods of lean performance when maintaining payments is difficult. For most banks, approximately 8% of their entire small business portfolio will be in arrears at any given time. Because of the predictability of small business volatility, most lenders expect about one in ten borrowers to request debt negotiation discussions over the course of every year. Rather than a borrower falling into arrears without comment, most lenders appreciate notice and discussion of problems in the early stages of difficulty. Therefore, debt negotiation is not bad per se. To a large extent, whether debt negotiation is good, or bad, depends upon purpose and timing.