The Debt Negotiation Process for Debt Settlement

Consumers who have a hard time figuring out how to eliminate debt often look for help from outside sources. One way that consumers sometimes get help is through debt negotiation. With this process, consumers have the potential to eliminate a relatively large percentage of their debt.

Debt settlement companies and law firms work on behalf of the debtor in an attempt to negotiate a lower account balance. They provide nearly immediate relief from the overbearing debt that burdens most people on a daily basis.


Once you begin working with a legitimate debt settlement firm, the lawyers begins negotiating with your creditors on your behalf. The debt settlement lawyer then attempts to negotiate a settlement with that creditor so that you can reduce the amount you have to pay. Typically, the creditor is willing to reduce the amount owed in exchange for a lump sum payment. For example, if a debtor owed $10,000 on a credit account, the debt settlement company may be able to get the creditor to take somewhere between $6,000 and $$8,000.

If you're considering working with a debt settlement firm, be sure that you understand exactly what you are signing up for and how much you are paying for it. The fees that debt settlement companies charge vary from one company to the next. Some charge a flat fee for the service, while others charge a fee based on the total amount of money that is saved on the settlement. Unless you can find a reputable company that chart is a very low fee, it may be best to go with one that bases their percentage on the total savings. This way, the company has an incentive to try to save you as much money as possible.

Although using a debt settlement firm or company can help you eliminate debt, when you go through a debt settlement, it will impact your credit history to some degree. Since you did not repay the debt that you owe it in accordance with the terms of the original agreement, the creditor will report this as a negative item on your credit report. With that being said, the benefit of getting rid of debt often outweighs the damage to your credit report. By getting out of debt, you can focus on other aspects of your financial life. For example, you may be able to start setting aside some money for savings or funding your retirement.

Some consumers get the debt negotiation and debt consolidation process confused. Many different companies market to help people who are in trouble with debt and they do not all provide the same service. With a debt consolidation company you put all of your accounts into a single account and pay them off over time. By comparison, with the debt settlement process, you pay off all of your debt at once and the creditor gives you a discount on what you owed. This helps you get the debt payoff process done much faster by comparison.

AUTHOR BIO: A somekeyword uses the protections found in state and federal consumer laws and extensive experience in consumer law in the credit and debt industries to offer a wide variety of affordable somekeyword solutions and other consumer financial legal problems.

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