Debt NegotiationWritten by Jill Morrison
Debt negotiation is a desirable option for those who are submerged in bad debt. It can be used to reduce debt totals by as much as 60 percent. Those seeking debt relief can choose to negotiate on their own or they may retain the services of debt settlement companies. In addition to reducing debt totals, these companies may also be able to eliminate fees or charges that have been accrued, reduce interest rates, and extend pay-off deadlines for their clients.
Benefits of Debt Negotiation
Debt negotiation is an aggressive method that should only be used for cases of serious debt. At the same time, this method is the best option for those who are completely overwhelmed with bad debt. If you are undecided about whether or not to use this method, you may want to consult with a debt management professional for advice. Some other options to consider are debt consolidation loans, debt management tactics, or transferring debt balances to zero or low interest credit cards.
When debt negotiation begins, you will immediately cease making payments to your creditors. You can continue to make deposits into a bank account to build up funds toward paying off debt. Once a debt settlement is reached, these funds can be used to pay off reduced debts in full. If debt negotiation is successful, debts may be reduced considerably, making them easier to pay off and reducing stress.
Some people who are hopelessly in debt will consider debt consolidation loans instead of debt negotiations. However, there are a few problems with debt consolidation loans. First, they are usually taken in the form of home equity loans. People using these loans risk losing their homes if the payments are not made on time. While debt consolidation loans do reduce interest rates and adjust pay-off times, they do not reduce total debt amounts. Therefore, debt negotiations are generally more effective for eliminating debt quickly with a minimum of risk.