How to negotiate with creditors and reduce debt to a fraction of what is owed

Dominique Grubisa Dominique Grubisa

DG Institute founder and CEO, Dominique Grubisa explains how to negotiate down debts to a fraction of what is owed, to as little as 20%.  

When I work with people in debt and having helped thousands of people become debt free, the one thing that really blows me away is that people don’t know that you can negotiate with your lenders and even more gobsmacking, is they don’t realize that your lenders actually want to negotiate with you.

Whether you’ve painted yourself into a financial corner and you’re strapped and wanting to get rid of debt or whether you’ve just got nuisance debt or debt anchor – debt holding you down, stopping you from focusing on where you need to be, because you’re constantly having to put out spot fires or you’re just a little mouse on a wheel running round and round and round servicing credit card debt and that sort of thing. Whatever the debt is, you can face it now and take control.

Consequences Of Debt

The first thing you need to know is that debt is just a commercial arrangement. It’s not criminal or anything. People are scared of the law and they’re scared of contracts and they think oh, if I breach a contract I’m in trouble and they think that their only options are to keep paying a contract if they’ve got a service debt or else go bankrupt and they don’t realize there’s a whole big world in between.

Let me put it this way, think of it as if you’ve lent someone else money. Put yourself in the lender’s shoes, pretend that you’ve lent someone money and they can’t pay. Something’s happened, they’ve had an accident or they’ve gone broke or they bet it all on a horse who came in last, for whatever reason, they just can’t pay, but they can give you something.

In your mind, you lent them $10,000. They don’t have $10,000 but they can give you 2,000 or 3,000. You’re still going to want to get back something and you’re not going to want to flog dead horse when you can’t get blood out of a stone. That’s the way that lenders think.

The law actually has a lot of protection for people in debt and lenders have to respect that. There is a financial ombudsman. There’s a service that can help you when you’re in debt. Banks have responsible lending criteria and they also have a code of conduct that says they have to help people in debt.

There is a credit code nationally, Australia-wide that says that your lender has to work with you when you’re facing financial hardship. So you can put your hand up and say, time out now, let’s talk, let’s come to the table and sort this out and they have to listen to you. And they can’t put a black mark on your credit score and they can’t do anything except come and meet and talk to you.

From there, you need to understand that they will make a commercial decision. If you say, I’m not paying anymore. I can’t pay anymore. That’s not immediate bankruptcy, that’s not a breach of contract where you’re going to go to jail.



That is just you making a commercial decision and them having the right to make a commercial decision also and decide okay, a bird in the hand, we’ll take something.

Debt Buyers

Do you know there’s a whole market for what they call secondary debt? Lenders are often just in the business of lending money. They’re not in the business of debt collection. When debt gets delinquent, they’ll just sell it off to someone else who will buy it.

Groups like CreditCorp, Baycorp, they’re debt buyers. A bank will say look, here’s a hundred million dollars, a book of debt of a hundred million dollars and we’ll sell that to you for 20 cents in the dollar or 10 cents in the dollar.

A debt buyer will purchase that book of debt and then they’ll try and collect it and if they can get more from you than what they’ve paid for it form the lender, then that’s how they make their money.

Remember, the world of finance is just the world of commerce and your debt is a debt to you. It’s bad for you but it’s actually an asset for other lenders that just gets sold. Don’t let that happen. Face it head-on.

The law is there to protect you and negotiate your debt down. Whether there is an end game or whatever your strategy is, whether you’re going to pay it out for cents on the dollar or buy time to sell up assets or do something, there is always a way. You just have to know your rights and your options.

For more information on debt recovery, illegal debt collection tactics , dealing with debt collectors and avoiding bankruptcy you can download the DG Institute’s gift pack on asset protection, including Dominique Grubisa’s latest book How To Cope When The Sky Is Falling and more.


Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practicing legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

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