You’ve just bought yourself a new car, you’re ready to make the monthly installments, and then poof! The economy falls, and your job is gone. What do you do now? Without a steady income, you’ll eventually begin to fall behind on your payments. Your credit card bills will build up, you’ll fall behind on your rent, and you may have to start thinking about selling your car. Unless you find a way to settle your debt, you’ll find yourself in a vicious debt circle, where you are constantly paying and borrowing.
When you’re unable to make through with loan payments and you feel hopeless, there are a few options you can consider. Debt consolidation, a formal debt agreement, bankruptcy, and debt negotiation are just some of the options you have. Debt consolidation basically refers to you taking out one major loan from a lender to pay off all your other loans, and bankruptcy refers to when you can’t pay off your loans and you declare bankruptcy to discard your debt. Debt negotiation, on the other hand, is when you either negotiate with your original creditors or the creditors to whom your loan has been sold to, to come to an agreement about a lower debt amount.
This is one of the most often used options that debtors will use to pay off a loan that they are no longer able to make payments towards. Creditors are also attracted to negotiation plans because it entails that they will at least be getting a sum of the debt paid back instead of nothing, as would be the case in some bankruptcy programs. But when should you decide to negotiate your debt?
The right time to negotiate your debt is when you find that you can no longer keep up with the accumulating interest, the penalties and late fees that just don’t seem to be clearing up, making it difficult for you to pay off your actual debt. On top of these issues, you are also being harassed by creditors and collectors and your credit rating is being destroyed, making it difficult for you to wrap your head around the future of your finances. When you find yourself in this type of financial dilemma, where you are falling deeper into debt rather than coming out of it, you need to consider negotiating your debt with your creditor.
Debt negotiation entails you and your creditors coming to an agreement about a finalised and reduced debt amount. Basically, you will both come to an agreement that is mutually beneficial to both you and the creditor. Creditors are more willing to come to an agreement on negotiation than have you declare bankruptcy or wait for you to pay off your loan. And it is beneficial to you as well, as you will be given the chance to have your debt significantly reduced and it will be easier to pay off.
In debt negotiation, you will be asked to pay a reduced amount of your debt in lump sum form, which is known as the full and final settlement. Some creditors such as banks and loan companies are willing to reduce your debt by almost fifty percent and will give you the opportunity to spread the payment over an agreed timeframe. If you feel that you need the advice of a professional, hiring a debt management firm like Sort My Debt can be beneficial as they can negotiate with your creditors. Debt management companies also have techniques they can use that will encourage creditors to reduce the debt payment amount substantially.
A Debt Management Company with qualified professionals will be able to help you reduce your debt considerably. They have experience in dealing with creditors and know exactly how to push them towards settling for a smaller lump sum amount.
Overall, if you have found yourself a part of the vicious circle of debt and can’t seem to find a way out, you may want to consider debt negotiation. Debt is a tough and heavy burden to bear, especially when it becomes too large to handle on your own. With debt negotiation, you and your creditors will come to a mutually beneficial agreement about what can be done to help you get back on track and out of debt.
If you need more information about whether debt negotiation is beneficial for you or the option you need to choose, consulting with a professional or a debt management company can help you. You will have a clear idea of where you stand financially, what your current financial future looks like, and if there are any chances the creditors will reduce your debt to a low enough amount that you can pay it off.
