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Can you Negotiate Credit Debt Settlement?
Employing Third Party vs. Negotiating Debt Settlement Yourself
Things to know about debt negotiation
Debts have very nasty tendency to escalate way too fast and way too high. The problem with debts is that it is very easy to incur huge indebtedness in a form of unsecured debts such as credit cards debts, personal loans and alike. Yet, it is not as easy to reduce debts as quickly as anyone wished to do that. There is a famous saying that you borrower money that belongs to someone else and you take it for some period of time.
When you repay, you give back your own money and you give it once and for all. When it comes to difficulties of repaying your own debts, negotiating credit debt settlement may sound as not such as bad idea. Debt settlement is another way to call debt arbitration when you try to reduce your debt by negotiation lower amounts with the lenders. It very often takes place in court and leads to several unpleasant consequences.
When it comes to debt settlement, it is crucial to know how to negotiate lower amounts. To hire a third party may be a good idea, if you have decided to succeed in your negotiation process. However, be very cautious not to fall into hands of illegal agencies specialising in tricking its troubled borrowers into debt settlement. The main goal of scam agencies is to leverage on your desperation to settle debts easily and quickly. They often would require high up-front fees promising to perform best negotiation with the creditors on your behalf. Since these companies do not elaborate on what actions they are taking to negotiate your debt, your credit score can significantly deteriorate as a result and some of the actions of these companies may be absolutely damaging to your reputation as a borrower.
Video 1: Debt Management: How to Write a Debt negotiation Letter
If you have decided to negotiate your debt yourself, the main rule to be realistic. It is important to understand that reducing your monthly payments by 30-50% is not very realistic. Think about 10-15% as an achievable target. Be ready that it is not a quick fix and you would be required to spend lots of time thinking through your financial position, planning and budgeting in order to persuade creditors that the negotiated position you are seeking is realistic and you actually plan to pay out your debts.
Be prepared that the credit card company would employed professional credit counsellor to negotiate debt on their behalf, so you may actually consider seeking some professional advise prior to getting involved in negotiations.
There are many non-profit organisations, which may be willing to help you and advise you on step-by-step process of negotiations. If you decided to act on your own, make sure that you have studied all possible options well, are on the top of your own financial standing and can clearly answer the majority of possible questions about your situation, motivations and reasons. At the end of the day, you are asking for a big gift in the form of debt forgiveness from your credit card companies and this is something which cannot be settled that easily.