Creditors will sometimes reduce interest rates or temporarily suspend payments (commonly known as forbearance) while their customers get back on their feet. These accommodations can offer some relief, but they frequently do not provide a permanent solution to someone overwhelmed with debt. However, debt negotiation and settlement can offer a permanent solution to your debt troubles.
How Does Debt Negotiation & Settlement Work?
Debt negotiation & settlement provides an alternative to filing for bankruptcy. Debt negotiation & settlement involves contacting your creditors to propose a settlement for past-due debts, often delivering significant savings over the total amount that you owe.
Do I Need a Lawyer to Negotiate with Creditors?
You can contact your creditors directly or hire professionals to negotiate on your behalf. Before hiring a professional, be sure to follow a few steps to avoid scams and outfits that over-promise but under-deliver:
- Ask for references from past clients
- Don’t hire any professional unless they provide you with a written contract (make sure to read that contract thoroughly before signing or sending any money)
- Ask questions if you don’t understand something (a reputable company should be willing to answer your questions)
- Check with the Better Business Bureau to see the company’s reputation
What Types of Debts Are Negotiable?
Though debt negotiation and settlement can be a solution for some people, not all debts are eligible. Often debts must be significantly past-due for the creditor to be willing to negotiate. If you are current on your payments or only slightly behind, there is little chance the creditor will negotiate.
Moreover, secured debts like car loans and mortgages generally can’t be negotiated down because creditors have little incentive since they can simply repossess the collateral (take your car) or foreclose on the real property (your home, condo, land, timeshare, etc.).
However, unsecured debts stemming from past-due credit cards often can be negotiated and settled for less than you owe.
If you’ve pulled your credit report recently, you may notice that some of your debts are reported as “charged-off.” This just means that the creditor has written-off the debt from its books for accounting purposes. But this does not mean the debt has been forgiven. Quite the opposite.
Frequently creditors will sell and/or assign charged-off debt to aggressive debt collectors. It’s important to understand that the creditor has every right to do this, and this process does not relieve you in any way from your legal obligation to pay the debt.
However, once a debt has been sold and/or assigned to a debt collector, there is a greater likelihood that the debt collector might be willing to settle for less than you owe, particularly since the debt collector most certainly paid far less to purchase the debt from the original creditor than the amount you owe.
Take Control of Your Debt Today by Reaching Out to Our Firm
The debt collectors are motivated to get collect as much money on the debt as quickly as possible. You can use this to your advantage. If you have a lump sum of money to negotiate your debt, you can often realize even greater savings. Please get in touch with our office, if you are experiencing any debt delinquencies. We will be happy to explore your debt settlement options with you or propose a bankruptcy plan of action if the debt settlement option is not available.
To explore your options, please call us at (808) 518-4844 or fill out our convenient online form to set up a FREE case consultation with our compassionate legal team.