This process involves negotiating with your creditors to resolve your unsecured debts. The creditor will often agree to accept less than what is owed to discharge the debt. Negotiations are typically handled by a professional third-party debt negotiator on behalf of the consumer.
Using Debt Negotiation is an option for consumers who cannot afford Consumer Credit Counseling, but also do not want to or cannot qualify for bankruptcy. A Debt Negotiation company can customize a savings plan to fit your financial situation and give you the funds to pay off settlements while objectively and effectively negotiating with your creditors on your behalf. Once you have saved enough, the debt negotiators use those funds to obtain settlements with your creditors and the process is repeated until all your debts have been discharged.
Each debtor is unique so your results may vary. The savings achieved by settlements will depend on your creditor and the type of debt involved. Debt Negotiation companies typically negotiate for percentages between 30% and 70%. That being said, some creditors will settle for amounts lower than 30% or higher than 70%, and some will only accept the balance paid in full.
Your debt situation will impact the amount of time the process takes. Most professional debt negotiation programs will take about 36 months or less, based on the number of enrolled debt accounts. However, the program’s terms can be extended past 36 months based on individual factors. The factors that impact the length of your time in the program are the amount of debt involved, the amount you have to negotiate with, and the status of your debt accounts. Settlements can take time because some accounts need to age while letting your savings accrue to offer a settlement to your creditors. Adding extra funds to your savings during the process can expedite the process and can reduce your time in the debt negotiation program.
While all creditors would prefer to collect the full amount owed, they recognize that if you file bankruptcy that they will receive nothing at all. To avoid taking a total loss, creditors are often open to restructuring debt, especially if they understand your financial hardships.
Organizations that provide credit counseling, known as Consumer Credit Counseling Agencies, help you in budgeting and organizing your finances to pay back your debt. They may help you to lower your interest rate to assist in paying back your creditors. CCCs can also assist in orchestrating a repayment plan, often referred to as a Debt Management Plan (DMP). However, many of these organizations are funded by the creditors you are trying to settle with and this could mean your repayment plan is in your creditors’ best interests, instead of your own.
A Debt Negotiation company is funded entirely through fees collected from its clients, making them objective in negotiating settlements for you with your creditors.
Before deciding to move forward with a bankruptcy filing, it is important to exhaust all other options for debt relief. While bankruptcy can eliminate all of your debt, there are long-term consequences. Each consumer’s circumstances will vary so a thorough investigation of debt relief options is recommended to find the right option for your needs. See the bankruptcy page to get a better understanding of the types of bankruptcy available.
Yes, but keep in mind that any funds spent on debt settlements prior to filing will be gone. Some examples of situations may require you to cancel a debt settlement program to pursue a bankruptcy filing including loss of wages, illness, and changes to your creditor accounts. Weight your personal situation before determining how to proceed.
Combining all your various debts into one large debt through financing is borrowing to address your debt. The most common debt consolidation loan is a home equity loan, since many consumers who use this option may not qualify for an unsecured loan. Home equity is the fair market value of your house minus the amount owed. These loans can pay off credit card bills, but it just moves the debt around without reducing it. These debts are now going from being unsecured to secured.
An unpaid home equity loan could put your home at risk of foreclosure. Those who use this option end up charging new debt on their credit card accounts, increasing their debt burden and their chances of financial difficulties. While some consumers can use this option effectively, it is important to investigate all debt relief options available. Be cautious about turning unsecured debt into secured debt.
No matter what debt relief option you choose, there will be benefits and disadvantages. It is important to weigh these based on your specific circumstances. For instance, a bankruptcy can stay on your credit record for 7 to 10 years, impacting your ability to obtain employment, new loans or credit, and even limit your ability to lease a home or vehicle. Still, this may be the best option for some debtors as the benefits outweigh the risks.
Debt Negotiation can also negatively impact your credit rating during the period while you are resolving your debt. Creditor collection efforts and legal remedies can be pursued against a consumer during the Debt Negotiation Program. Credit counseling can negatively impact your credit and prevent you from obtaining a new home refinance or additional credit.
Educating yourself on each debt relief option’s pros and cons can help you to make an informed decision. Effective Legal Debt Solutions can provide you the information to make your decision and assist you each step of the way.
Debt Negotiation is a substitute for bankruptcy for those personal or financial hardships that impact their capability to repay their creditors. Most companies require that you have $10,000 in unsecured debt and can demonstrate they are experiencing a legitimate hardship, including unemployment, illness, or other situation that limits your ability to repay your creditors. Effective Legal Debt Solutions performs a complete intake verification to ensure accuracy, affordability, and that a debtor completely understands how the program works.
Each Debt Negotiation company has different qualification standards, but normally, if you do not have more than $10,000 in unsecured debt or are not experiencing a legitimate hardship. Typically, these means that a debtor with not enough debt, the wrong type of debt, and too much or not enough income to address their expenses are not likely to qualify. Other debt relief options are available for those that do not qualify.
Unsecured debts qualify for a Debt Negotiation Program. This debt is not secured by any type of collateral. Credit card debt is the most common type of unsecured debt. The amount of debt is also a significant factor in determining if you qualify for Debt Negotiation. If you have $10,000 in unsecured debt, a financial hardship, and do not want to file for bankruptcy, then Debt Negotiation might be the option for you.
- Unsecured debt
- Credit Cards
- Medical bills
- Department Store Credit Cards
- Unsecured bank loans
- Bank overdraft and associated fees
- Gas cards
- Jewelry store loans
- Furniture store loans
- Repossession balances
- Computer loans
- Business debt with restrictions
- Judgments over 12 months old
- Finance companies
- GE Money
- Care credit
- Payday or cash call loans
Each debt acceptance is based on individual facts and circumstances as well as the approval of a lawyer. Effective Legal Debt Solutions reserves the right to accept or reject any debts upon enrollment.
You do have the option to negotiate a settlement on your own, but without the right experience and knowledge, you may not get the best settlement for your circumstances. Our highly trained negotiators, with years of experience, can work with your creditors to secure the right settlements to meet your needs. Our law firm affiliates also have reputations with various creditors as reputable and honest so the creditors know they will not enroll unqualified clients. Creditors also know that our law firms are able to process their settlements efficiently, reducing time and collection costs.
To be successful in your negotiations, you need to understand the collections process, how creditors vary, and when it is best to start negotiations. You must also have knowledge of the settlement structure to make sure the agreement accurately spells out the negotiated settlement.
Debt Negotiation is a complicated process, which makes professional debt negotiators better qualified to negotiate your debt settlements. If you are struggling with debt, then find out what debt relief options are available by contacting Effective Legal Debt Solutions to receive a free consultation. Call 833-827-3285 or complete the online form to be contacted by one of our knowledgeable representatives.