Debt Negotiation > Will It Work For You?

WILL THE DEBT NEGOTIATION STRATEGY WORK FOR YOU?

Well be the first to admit that the debt negotiation strategy is not for everybody. But for those who qualify, its a no-nonsense financial recovery program that makes good sense.

The list of questions below will help you decide whether or not you should consider debt negotiation.

1. DO YOU HAVE A LEGITIMATE FINANCIAL HARDSHIP CONDITION?

This will usually take the form of loss of income, medical condition, death of a family member, divorce or separation, loss of child support payments, or some other serious event that caused a severe financial setback. It doesn’t always have to be drastic, but there should be an identifiable circumstance (or set of circumstances) that got you into trouble.

2. ARE YOU COMMITTED TO AVOIDING BANKRUPTCY?

Just about every debtor who tries to negotiate with a bank threatens bankruptcy. A proper debt negotiation strategy will take the opposite position, by promising that bankruptcy will not be filed if the creditor agrees to a workable arrangement. This promise is essential to the process.

3. DO YOU OW MORE THAN $7,500 IN UNSECURED DEBT?

If your debt level is much below that, it becomes unrealistic to apply negotiation strategies at the aggressive level we’ve been discussing. Discounts can still be obtained and favorable arrangements made, but frankly, major reductions in debt are much more difficult to obtain. A level of $20,000 to $50,000 is more typical, although there is no fixed rule. It also depends on the exact nature of the debt.

4. ARE YOUR DEBTS PRIMARILY FROM CREDIT CARDS?

The negotiation strategy described above works well for a variety of debts, but the hands down winner is credit card debt. The steepest discounts and greatest success can be obtained with credit card accounts. Department store charge cards, financing contracts, and miscellaneous bills can also be negotiated, but with less predictable results. Medical bills are often negotiable, depending on the background of the case, usually with good results. Student loans cannot be negotiated (since these are Federal loans, Uncle Sam can dip his hands into your tax refund to collect the balance). Auto loans can be refinanced, but generally not reduced. Mortgages can be rescued from foreclosure with a variety of techniques, but of course you’ll still be on the hook for full value.

5. IS YOUR MONTHLY BUDGET UP TO THE JOB?

All the best intentions in the world won’t help if you have nothing to offer your creditors. A good rule of thumb is that your monthly budget should be around $150-$200 for every $10,000 of debt. So if you owe, say, $30,000 total, then your monthly budget should be around $450-$600.

6. DO YOU HAVE ADDITIONAL RESOURCES TO WORK WITH?

Even if you can only manage a small monthly amount toward debt reduction, are there other resources at your disposal? Examples include cash-value insurance policies, borrowing from family, or even the sale of unneeded household items. Is there other property you could sell to raise capital?

If you are in a condition of financial hardship, committed to avoiding bankruptcy, owe more than $7,500 of credit card debt, and have some resources to work with, then you should definitely give serious consideration to the debt negotiation strategy.

FREQUENTLY ASKED QUESTIONS

1. WHAT HAPPENS TO MY CREDIT?

Your credit score will decline during the program itself. How much it will decline will depend on your original circumstances. Some of the accounts you place into negotiation are likely to “charge off”, which will reflect negatively on your credit. However, once a debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled, the credit score will begin to improve since the negative items have been resolved. In addition, your debt-to-income ratio (an important measurement made by potential lenders that is not always directly reflected in your credit “score”) will greatly improve, since you will be debt-free. There are also several useful techniques for repairing your credit later on. Of course, credit is an important thing to have, but obviously your first priority should be to clear up your debts and get back on your feet financially. Once you are ready, we can assist you with the process of credit restoration.

2. HOW DOES THE ATTORNEY GET PAID?

Good debt negotiators work on a contingency basis. This means that unless they achieve an acceptable settlement, they are not entitled to any fees for their services. Further, most negotiators charge a fee that is based on the amount of savings they achieve. When the fee is structured this way, the client is always in a NET SAVINGS POSITION. There is typically an enrollment or administrative fee at the start of the program to establish your account, as well as a small monthly charge to maintain your account.

3. IS THIS LEGAL?

Definitely! You have the right to appoint a third party to represent you in debt matters. We have settled debts with the largest credit card banks in the nation on behalf of our clients.

4. WHAT ABOUT LAWSUITS?

Lawsuits happen less frequently in debt matters than most people think. Some debtors fall behind, don’t make any payments for years, and never hear from a single attorney. Of course, creditors certainly have the right to sue you to recover their money. But the purpose of the lawsuit is to force a settlement on the matter. In other words, the creditor is just trying to get paid. Accounts that have reached this stage can still be successfully settled, provided the client has sufficient funds at the time. Otherwise, most creditors are amenable to renewed payment arrangements in such a situation. The worst-case scenario is that a client might have to pay back the balance in full on that particular debt.

5. CAN MY WAGES BE GARNISHED?

A common tactic used by aggressive debt collectors is the threat of wage garnishment. If you’re already struggling financially, nothing is scarier than the prospect of having money taken out of your paycheck without permission. Collectors try to make it sound like this will happen on your very next payday if you don’t send a check immediately.

This, quite simply, is false. The creditor first has to sue you, obtain a judgment, and then file for a garnishment action. If you’re willing to work with your creditors, wage garnishment can normally be avoided.

6. CAN I DO THIS MYSELF?

Certainly, but we can’t imagine why you’d want to! Any discounts you achieve on your own will not be as deep as those obtained by a professional, and you’ll spend countless frustrating hours in the process.

7. WILL I STILL BE ABLE TO USE MY CREDIT CARDS?

No. Since the banks are giving up half or more of the money you owe, they will of course discontinue your credit privileges. However, many clients keep current on one card with a small credit line for emergency purposes.

WHAT’S THE NEXT STEP?

To see whether you qualify for this program, just give us a call at 1-800-975-5346. We offer a FREE PHONE CONSULTATION with NO OBLIGATION.

After we’ve gained an understanding of your situation, we can advise you whether this approach will work for you. That’s it! Let us hear from you today.

You have nothing to lose, except that mountain of debt!