Debt Negotiation (definition)
Debt Negotiation
Debt negotiation, sometimes known as debt settlement or debt relief, is the process of negotiating with one or more creditors to improve the terms on existing debt. Sometimes it's as simple as calling up your credit card company and asking for a better rate.
In more extreme situations, debt negotiation is asking for a lender to forgive part of the debt, and can be a last-ditch attempt to avoid bankruptcy. It may be rarely granted, but negotiating a lower-than-owed payoff of a loan or credit card balance may be more attractive to a creditor than the possibility of waiting months or years to obtain even less if the debtor files for bankruptcy.
Although it may be difficult to swallow your pride and approach your creditors, sometimes it is just plain necessary. Before you do so, and certainly before you pay someone to do it for you, sit back, get a scratch pad, and figure out how much you owe, who you owe it to, how much you can afford to pay monthly, and go from there.
Your creditors want you to pay them back. The last thing they want to do is haul you into bankruptcy court and get 20 cents on the dollar or less, after spending legal fees. They might be willing to work with you, you might be able to afford paying off the entire debt if they give you a better repayment schedule and reduced or even forgiven interest. If you've documented your financial situation, and walk in with a plan and an honest plea for help, you might be surprised just how far they'll go in helping you out.
Remember, honesty is the best policy. It won't help you to go in with a chip on your shoulder and tell your creditor that you can't afford to pay him, and have him look up your credit history and find out that you financed a $4000 flat screen TV last week, and a new BMW the month before that. Debt relief is possible, and is done every day of the week. If all else fails short of bankruptcy, you might consider it, but before you do, do a search on this site for all the articles dealing with the subject before you make any commitment.