What is Debt Negotiation?
Debt negotiation works to mediate between the creditor and debtor. To better help you with negotiation I have reviewed over a hundred companies.
A couple of different solutions to financial troubles exist; however, the first thing you often need to do is debt negotiation. As a debt relief solution it begins the process to reduce your financial troubles to a more manageable situation. It can also solve them completely depending on the effectiveness of the negotiation. Quite often negotiation is only as effective as the mediator. It behooves you to find the company you can trust and work with for the best results with negotiation.
Before launching into a complete breakdown of what debt negotiation is, it is imperative to discuss what I do.
Best Company for Debt Negotiation
I examine companies like http://www.nationaldebtrelief.com. National Debt Relief is a debt negotiation company because they will provide you with counseling, negotiation, settlement, or management options. This company offers you settlement of all creditors at once instead of piecemeal to make it more affordable for you. The point is I review companies offering negotiation so that you can find a trusted company, and one that has definitely been vetted to a very high standard.
Later I will talk about two other companies offering negotiation to you, but first it is important to examine your solutions. Negotiation is where a mediator will speak on your behalf to creditors. They will know exactly what you can afford to do based on your current financial situation. They will work to reduce the debt you owe in order to help you pay it off. They can do this in a couple of different ways when it comes to negotiation. They may first try to reduce the debt to a lump sum you can afford due to savings. If this doesn’t work they may offer a consolidation loan as a means for better debt negotiation.
You see, a creditor wants to get their money so they are willing to take part in debt negotiation. If you file bankruptcy it will be hard to get any money from you to pay off your financial burden. Yet, if they talk with your mediator, there is a very real chance during the negotiation process to obtain anywhere from 30 to 80 percent of what you owe them. They will try to gain as much of the money you owe as they can. Your mediator will be on your side in the debt negotiation to make as good a deal as they can.
Debt settlement can happen after debt negotiation. The amount has been reduced so now the time has come to settle the financial burden, meaning to close it out. You will pay the lump sum in full that was promised during the negotiation. At this point the settlement is complete and the creditors can no longer ask you for the full amount of the money originally owed. They have agreed during the negotiation to settle for an alternative amount.
Consolidation loans can often be used in debt negotiation proceedings. The creditor does not need to know where your funds are coming from. Rather, they just care that you will be returning at least part of what you owe. The negotiation company will sit down with you before they mediate. If you have no savings or very little, they may offer a consolidation loan. This loan will be offered at an interest rate and monthly payment you can afford if all your debt is paid off save for the consolidation loan. In other words, the loan replaces the financial burden and since the debt negotiation happens the amount should be reduced from the original amount.
The amount a negotiation company is willing to offer in a consolidation loan is based on what you can afford. During mediation the negotiator will try to reduce the amount to as low as possible, even lower than the maximum amount they are willing to give you in a consolidation loan. At the end of the negotiation you may need to use what savings you have plus a small loan. It at least solves the issue and makes the debt negotiation worthwhile.
CuraDebt.com is the second company I usually recommend for debt negotiation. It is an information and fact site, along with a place that offers credit counseling and settlement. It is a great company because they have negotiation in place in which their negotiators have spent a lot of time forming relationships with some of the top creditors.
Oak View Law Group is another company that works closely with credit card companies. They endeavor to reduce your credit card balance through debt negotiation to make it easier to pay off the cards with a lump sum or consolidation loan.
Debt Negotiation when your Debts are Uncontrollable
Are you sitting with a shocked face wondering what happened to your finances? How did they get to the point where you are defaulting on your debts and may lose your home? Perhaps you are at the point where you just do not see any solution other than bankruptcy, and even that might not be possible? If you feel you are in this situation of despair do not lose hope quite yet. Try debt negotiation as a means to reduce what you owe to collectors. It is one solution that might work. If you have tried it there are still other choices you can try, but the key is to be proactive, seek debt help to find a solution, and make an effort to get your finances back on track rather than allowing them to overwhelm you.
Firstly, debt negotiation is a procedure where a negotiator speaks with your creditors on your behalf. This expert will take the amount of money you either have saved or can pay on a monthly basis and make a deal. Let’s take a look at an example.
You owe $20,000 in credit card debt, which you have defaulted on. You can pay a monthly amount of $200 towards the debt to get you back on track. The negotiator will take the $200 minus their fee, and tell the credit company that you can pay a set amount each month. This helper will state that you are willing to pay this amount if an arrangement can be made. Credit card companies make their money from interest rates. They want it to be high, but they also know that if a person defaults and rolls their credit cards in with a bankruptcy they will never get paid. So, the debt negotiation is to reduce the interest rate, so the monthly payment goes towards the principle amount rather than too much interest. At least this way the credit card company does not lose out completely.
Research of Debt Negotiation Companies
The other option is to have a certain amount in savings that can be divided up among the credit cards. The amount is always less the debt negotiation fee. The idea is to obtain a payoff amount that wipes the entire debt out. It leaves you debt free or at least in a better debt situation. The downside is that you do need savings before this option can work. It also means you may get one debt cleaned up, but still have five others out there. At least you would have the money you were sending to the company you paid off.
Debt negotiation is going to look for the best possible income to get those debts considered collected and closed. You do need to find a trustworthy company to help this process come to fruition. Do not get scammed. Complete your research of at least three debt negotiation companies to find out which one will work best for you. Also keep an eye on the company by speaking with them at least once a week and double checking with creditors.