Negotiation Steps To Eliminate Credit Card Debt - How To Get Your Debt Under Control

Negotiation Steps To Eliminate Credit Card Debt - How To Get Your Debt Under Control

Do you wonder how to get your debt under control? Well, there is a simple way to do so and this is the use of debt settlement. In debt settlement, you need to negotiate with the creditor and earn debt elimination by a certain percentage. This will help you to get your debt under control. But, how does a settlement process work? What are the negotiation steps involved in the settlement process? This article aims at explaining the process and the steps of negotiation involved in the process.

There are a few basic things that you need to keep in mind before you go for settlement. First, you need to make sure that the amount of unsecured debt that you have does not fall below $10,000 mark. This is because of the fact that this amount has been fixed and floored by federal law. The second thing that you must remember is that you need to bring all your unsecured debts in one place. That means you need to consolidate your debts. All you can do is go for a consolidation loan and pay off the previous loans or in case of credit cards, you can use the option of balance transfer. This is necessary to make sure that the time required for debt settlement can be minimized and also the cost of settlement can be significantly reduced. The third and final thing that you need to remember is that there must be a constant flow of income. This is because of the fact that at the end of the settlement deal you need to pay a bulk amount of money to the creditor and you must have proper income sources to accumulate that fund.

Now that the prerequisites are defined, you have a choice of self arbitration or you can go for professional help. In self arbitration, you will have to negotiate with the creditor on your own and you will be responsible for handling any awkward situation. The maximum that you can achieve with self arbitration is 30% debt elimination. On the other hand, if you go for professional help, any problem will be sorted out by the negotiator and the minimum amount of debt elimination that can be attained is 50% and the maximum can reach up to 70%.

Considering that you prefer professional help, you need to hire a professional settlement firm. The negotiator from the firm will first create a repayment schedule and then he will send a letter to the creditor informing the later that you will not be able to repay the whole debt and simultaneously, he will ask you to go delinquent.

After delinquency is attained, the creditor waits for 90 days to 120 days and then sells off the debt to a collection agency. The job of the collection agency will be to recover the dues from you and paying 20-30 percent of the total recovery to the creditor. The negotiator will then contact the creditor. Here the job of the negotiator will be to offer 30 percent to 50 percent of the money in due to the creditor and to threaten the creditor of bankruptcy.

The creditor will accept the offer because the amount of dues recovered in the second deal will be far better than the amount of dues recovered and handed over to the creditor. The creditor will then sign a new contract with you and will give a specific time frame to you to repay the agreed upon sum of money. This is how negotiation takes place and you can take control of your debt.

With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.

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