Debt Negotiation-Best Way to Come Out of a Financial Crisis
Debt Negotiation-Best Way to Come Out of a Financial Crisis
Debt negotiation is also known as debt settlement, debt arbitration or credit settlement. According to experts, debt negotiation is considered to be the ideal financial solution for those consumers who are presently facing a colossal amount of financial difficulties and are considering bankruptcy as an alternative.
Declaring bankruptcy to get rid of debts is a costly method. Consumers who choose the option of bankruptcy have to face a reduction in their credit score. Individual bankruptcy also makes it hard to get approval for cars, credit cards or homes as bankruptcy remains on the credit report of the consumers till a period of 10 years.
In theory, if there is a higher risk to the creditor then the chances of his settling are more likely. Debt negotiation will definitely affect the consumer's credit score in an adverse way. However, the damage done to the consumers overall credit standing is negligible in comparison with the damage done by declaring bankruptcy.
One can consider the option of debt negotiation in the following cases:
If you carry over the balances on the credit cards every month. This implies that apart from winning a lottery there is no other way by which you could pay off the balances of your credit cards, at one time. If you look at all your bills and realize that you can only pay the monthly minimums then its time for you to consider negotiations.
If you notice that you are unable to make all the payments every month on time. You should start negotiating at this juncture because this is the first sign of trouble. When you make late payments your credit rating will plunge immediately.
If you have been receiving calls from collection agencies and creditors regularly and you are burdened with a substantial amount of debt.
The reasons why one should opt for debt negotiation during such a financial crisis are as follows:
The debt settlement attorneys have specialized skills by which they can work in close association with your creditors. This helps them in negotiating and reducing your debts.
It may help to lower your monthly payments because usually your lawyer will negotiate for a reduced interest rate with your creditors.
Realistically speaking, there is no easy solution for reducing debt. Hence, any company that makes tall claims and guarantees will most probably not be able to keep its promise and hence, should be avoided.