Respite from debt via negotiation

The time when you realise that you are lagging behind in payments for more than 3 months, you might want to consider negotiating your debt. You will surely want to adjust your debt with your creditor offering a limited payment towards an already existing balance.

If you are unable to afford even minimum monthly payments, then undoubtedly you will like to consider reconciliation of your due bills to forgive some amount of debt. For example, John owes $20,000 in a credit card and is not able to afford minimum payments every months to pay off the debt. John tries to strike a deal with his creditor offering a one time payment of $14,000 and in return of this, the creditor will have to agree to forgive the remaining $6,000, marking the debt as “paid off”. Your creditor is likely to accept this amount and let go a considerable amount since, the creditor is anxious about not receiving a single penny later if you declare bankruptcy.

How to negotiate debt?

There are debt consultants whose work is to help you out with the procedures of negotiating with your creditors. You need to pay certain amount of fees to the company who helps you provide relief from the debt. Debt relief by negotiating with your creditors might involve a lot of squabbling. However, if you’ve the patience and knowledge to deal with the creditors you can do it yourself. If you choose to hire a debt negotiator, you must shop around before opting for one. Make sure to check the company’s website and BBB accreditation. Check to confirm that there are no complaints about the company.

You must be aware of your rights before zeroing down on anything. If you are aware of your rights and the laws, your money will certainly be protected. You can contact the Federal Trade Commission or your state’s attorney general in order to get information about the negotiators and debt collectors.

Advantages of debt negotiation

Debt negotiation have certain direct advantages mentioned below that makes it quite attractive for people who are undergoing financial troubles:

1. You can save a lot of money since you only need to pay a certain percentage of the principal amount.

2. Generally, debt negotiation take less time than any other debt relief programs. It completely depends on the amount to be paid and personal financial condition.

3. If you don’t have a fixed source of income, you can modify your payment structure according to your suitability.

4. After enrolling in this debt relief program, you get freedom from harassment calls from the creditors. You don’t need to deal with them directly.

5. All your financial details are kept confidential and secured.

However, your credit score can seriously get affected if you negotiate your debt. This information generally stays in your credit report for seven years. If you take hold of your finances after undertaking this debt relief program, the impact of debt negotiation will fade away with time.