If you are in a situation where paying off your debt seems impossible and even debt consolidation won’t help, you can consider debt negotiation or debt settlement. This is only recommended for people who are in serious financial difficulties. Using this process, you will be able to save yourself from bankruptcy. In this article, we shall discuss things to keep in mind while negotiating your debt. However, you can always use some help from debt management services in Alberta, Calgary, Edmonton, or Lloydminster.
What is Debt Negotiation and How it Works?
In simple words, debt negotiation in Edmonton is a process that takes place between a borrower and a creditor to arrive at a mutually agreed settlement on a debt that the borrower had taken but is unable to repay in full. This is a strategy that is used by borrowers to avoid bankruptcy when they are unable to pay off their debts.
Generally, private debt settlement companies are the ones who help settle the agreement between the borrower and the creditor by charging a fee of about 15-25% of the settlement amount. When you enter into an agreement with such a company, you will be required to stop making payments to your creditors. You will start making payments to the debt settlement company and they will negotiate with your creditor to lower the amount of debt. Once an agreement is reached, the company will pay your creditor and this process can take up to 3 years. Usually, unsecured debts are eligible for debt settlement which include credit card debts, personal loans, medical expenses, etc.
Tips Regarding Debt Negotiations
You should always start your negotiation by informing your creditor about your financial situation whether you negotiate yourself or through a debt settlement company. Whenever you agree on debt settlement terms with your creditor, always have them written so that you do not have to face issues regarding those terms in the future. Try to start your negotiation by offering to pay a lump sum amount, say 25%, and increase it gradually. Always try to settle it for 50% or less. Stay honest, keep calm, and explain your situation while you negotiate. However, if you are stuck in a bad situation, it is recommended to take help from a debt settlement or debt management company. They are professionals experienced in dealing with creditors. Most creditors do not want to negotiate on your debt and convincing them alone will be a huge task.
The Bottom Line
In conclusion, debt negotiation can save you from a situation of bankruptcy. There are some risks like added costs and a big hit to your credit record, but these are not as bad as bankruptcy. So, if you are from Alberta, Calgary, Edmonton, or Lloydminster, do not lose hope if you can’t pay off your debt, Credit720 is always at your disposal to offer effective financial debt help in Edmonton.