When you decide that you are ready for debt negotiation, it should be a situation that is only one step away from bankruptcy. This means you are on the edge, but no yet ready to declare bankruptcy. This type of service gives a person one last chance to avoid bankruptcy and avoid all of the consequences that filing for bankruptcy entails. Basically, a representative will contact your creditors and attempt to negotiate lower payments and a schedule that will enable you to pay back most of your debt and avoid defaulting. Sometimes a negotiator will be able to get a creditor to eliminate late fees that have piled up making it impossible to stay current. A negotiator may be able to reset the payment schedule, so you can start fresh with no back payments due until the end of the loan. A negotiator may also be able to reduce interest rates to lower the monthly payments.
When you should use a debt negotiating service?
If you tally up all of your obligations for debt as well as expenses for a typical month and you have enough income to meet these payments, then you need to forget about debt negotiation. If it is close, you should first look at any assets you can sell to apply to your debt and bring down the monthly amount owed. Also, you need to look at any monthly expenses that can be reduced. In short, you need to attempt to lower your cost of living. If this is not enough and you only need a little relief, debt negotiation may be the financial relief you need and a way to avoid bankruptcy.
How to avoid a scam
Although there are many legitimate debt settlement companies to choose from, unfortunately, there are also a great many scams that you need to avoid. Many people are desperate when they reach out for help with debt, and con artists seem to be able to sense this and are attracted to it. There are, however, steps you can take to avoid being ripped off. The most important is to simply avoid any business that makes wild and exaggerated claims about debt settlement. A true debt settlement firm will be able to reduce debt from 15 to 25 percent. This is an average and they may be belt to do better, but to be honest, sometimes they can’t reduce your debt at all. It depends upon your financial circumstances and the type of debt you have.
When shopping for a good debt settlement firm you can check with the better business bureau to see if there have been any complaints. You can also check reviews, but this can be tricky because you can never know if the reviews are from actual customers are ones that have been paid for by a debt settlement company. Often the best choice is a debt settlement company that is headed by an attorney. All attorneys must have a license to practice and be in good standing. A creditor is more likely to listen to an attorney because they have a better understanding of a debtor’s rights and can take legal action when appropriate.