Debt Negotiation > Debt Negotiation Program

HOW THE DEBT NEGOTIATION PROGRAM WORKS

The negotiation process will make more sense if we walk you through a ďnuts and boltsĒ example. To be consistent, weíll use the previous example. Letís say you owe $25,000 on five different credit cards, each one with a balance of $5,000. Youíve been paying an average of $500 per month in minimum payments, making sacrifices along the way, only to see your total debt stay the same or even grow due to late fees or over-the-limit penalties. What happens if you donít send out the $500 and put that money into a savings account instead?

Well, the first thing that will happen is that your telephone will start ringing off the hook, and the banks will want to know when their monthly payment is coming. However, there are several very simple techniques for dealing with the problem of creditor harassment, and provided you follow a few simple instructions, most of the nuisance calls can be eliminated.

When the strategic moment arrives, the attorney will make contact with the creditor to inform them of your hardship and your intention to “settle” the account. The timing of this process is usually based on how late you are on the debt and the amount of funds you have available for settlement. Now, during the initial months, most banks will not settle.

This is not an overnight process. Sometimes it takes 5-6 months or more to reach an agreeable settlement. Let’s say that three more months have elapsed. Over a total of four months, you’ve set aside $2,000 in your settlement fund ($500 times four months), because you haven’t sent regular payments to your creditors for three months.

What happens next? One of the five creditors decides to get it over with and agrees to accept a 50% settlement, provided payment of the full $2,500 can be made within 30 days. Since that gives you another month to work with, you’ll have the $2,500 from your settlement budget. Your attorney obtains a written settlement offer from the bank and sends you a copy. You release the funds, payable to the creditor, and the attorney forwards the payment on your behalf. Everything is properly documented for your protection and nothing is left to chance.

So what just happened? You paid $2,500 to wipe out $5,000 worth of debt, and saved $2,500 in the process. After five short months, your total debt stands at $20,000, instead of the original $25,000. You’ve eliminated 20% of your problem debt in only five months!

Further, you’ve traded an open situation for a closed one. That $5,000 debt that we just settled would have continued growing and growing. Instead, we’ve traded that never ending situation for a defined settlement of $2,500, and once you’ve paid that $2,500, you’re done with that debt. It’s out of your life forever!

Remember, on the bank’s hardship plan, after six months, you’d still owe around $4,700.Which you would rather owe: $4,700, or ZERO? The power of this approach for rapid debt reduction is simply incredible.

“But what about my other four debts?” you ask. Good question. It’s important that you understand. The debts are negotiated ONE AT A TIME, based on your budget and your ability to handle the settlements. The other four creditors are informed of the first settlement by your attorney, when it is appropriate to do so—and to encourage the other creditors to cooperate.

The other creditors simply have to WAIT THEIR TURN. Now, let’s do the arithmetic and see how long it would take to completely wipe out $25,000 worth of debt using this approach. If we cut $25,000 in half (50% settlements), that’s $12,500 in remaining debt, divided by the $500 per month budget, equals 25 months. So in a little over two years, the client in the above situation could be completely debt free, without spending any more per month than they were already paying in minimum installments!

To be completely fair, the above example is simplified and ignores some of the complexities that can arise, but the basic math is sound. In fact, it frequently works out better than this. If the settlement average comes down to 35% (which is quite common), then the process could be completed in only 18 months.

This approach to DEBT REDUCTION is simply the fastest and safest method of eliminating problem debts.

DISCLAIMER: It’s important that you understand us plainly here. We’re not advocating that everybody suddenly quit paying their bills to force their creditors into settlements. There can be negative consequences to your credit score through this negotiation process, which should therefore only be used in the event of legitimate financial hardship. If you have sufficient income to reduce your debt load the ordinary way (by reducing the balances with payments in excess of the minimums), then you should definitely do so.

The negotiation process works best in the event of LEGITIMATE FINANCIAL HARDSHIP.

Will this program work for you?