If you are thinking about what debt negotiation is, you may have questions. This article contains answers. If you have accounts that are with collection agencies, going through debt negotiation with these agencies can save you money each month and help you eliminate your debts without breaking your bank. In the long run, this kind of debt relief solution can help you get back on your feet without you having to file bankruptcy.
Debt negotiation is designed for people who cannot handle the bills that are now with collection agencies. The longer your accounts have been with these agencies, the more leverage you have. What debt negotiation is involves contacting your creditors and offering them a reduced amount in exchange for the forgiveness of the rest of the debt. This is also called “settlement”. Many times collection agencies are willing to accept a settlement amount because it beats getting no payment at all. Once you begin making your timely settlement payments, the creditors must stop their collection activities.
There are downloadable self-help debt settlement kits, or if you want to hire someone to handle things for you, there are negotiation professionals that can act as your representatives in all negotiations with your creditors. As soon as you hire someone to act on your behalf, the collectors deal directly with your representative. This puts a buffer between you and them, eliminating the harassing phone calls and demanding letters.
A debt negotiation company will sit down with your creditors to come up with a new payment plan or an agreement that will wipe out part or all of your debts. While this can provide much-needed relief for both you and your income, it may drop your credit score some while you are in the repayment process. Once you have made your final payment, your credit report will show that your debts have been paid off or “settled”. At that point you can begin to rebuild your credit again.
If your credit is bad, remember that you can take steps to rebuild your credit score once your settled amount is paid in full. Keep in mind that your timely payments on the settlement amounts can be reported to the credit bureaus. Debt negotiation can also ensure that you avoid filing bankruptcy. Image the impact that would have on your credit score…