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DEBT RELIEF | Debt Negotiation | DIY vs. Professional Help

The Professional Debt Negotiator

The type of person you are will determine whether you should pay a professional to settle your debts or use the do it yourself debt relief method. There are a lot of terms when it comes to debt -- debt settlement, debt consolidation, debt restructuring, debt management and credit counseling but this article applies specifically to settling debts not joining a credit counseling program. Those are provided to repay your debts monthly with limited interest and late fees

Debt negotiation (also referred to as debt settlement) is a process that many people find confusing and overwhelming. While most people dont necessarily settle their debts alone, many people do with the help of industry experts. Because of the relationships built by the debt negotiator in the credit industry, they are often able to work out substantial savings on your behalf for total debt relief.

The industry of debt settlements has become flooded with lots of bogus offers, people are more confused than ever. Debt settlements are normally done in lump sum payments but a good negotiator can often arrange repayment plans as well.

The key to success is someone extremely knowledgeable in the process from beginning to end who has solid relationships with creditors and collection agencies. With the downturn in the economy over the past several years, debt negotiating has become more fruitful for the consumer.

Lenders and creditors know its tough out there and while signs of an improving economy are slightly showing, bankruptcies in large, still loom. Creditors realize this and have even begun offering their own debt settlement letters at first sign of delinquency. This is something that was never seen before. Creditors for the most part WILL settle debts because some money is better than nothing or a bankrupt debtor.

For these reasons, some people are more comfortable having a professional settle their debts. Should you pay for professional debt settlement? That depends on your ability to handle the process yourself. Some of us are simply not cut out for a negotiation process. Perhaps it's intimidating to the point where you just cant bring yourself to deal with it. In that case, hiring someone may be a perfect solution for you.

Maybe you simply dont have time but you have money set aside and you're now ready to start paying off the debts. Having someone handle it for you can make things a lot easier -- but normally you will pay the professional debt negotiator a fee. The fee is well worth the cost if you still end up saving 30-60% of the total debt. One of the best perks to using a professional debt negotiator would be the relationships he's built with creditors and collectors. He may be able to get results where you have failed.

Can You Become A Confident Debt Negotiator?

There are a lot of us who like doing everything ourselves including dealing with creditors and credit bureaus. We find it challenging to see what we can accomplish -- or we simply want to save even more money and avoid the fee that a professional debt negotiator would charge.

It takes time to settle your debts and its a process of back and forth letter writing that can take months to agree on. However, since the economy is struggling it's a perfect time to take advantage of how much more willing creditors are to settle. Before 2007, it was almost impossible to deal with a creditor or collection agency to settle your debts but over the past several years creditors have begun to become more proactive in avoiding debt write off.

The crash of the real estate market flowed onto personal debts like credit cards. Lenders became painfully aware of the uptick in bankruptcy filings and delinquencies because people couldn't even pay their mortgage. Surely, if you cant afford to pay for housing then credit card payments and even car loans will be affected. This realization caused lenders to begin offering settlement letters at first sign of serious delinquency for most unsecured debts.

Rather than charging the debt off, they began sending a series of letters offering to reduce the debts to give the debtor some relief and hopefully recoup a bad debt. This action prolonged the cycle of write offs -- leaving the debts in house longer in hopes to collect a portion of the balance. This is a benefit consumers can capitalize on and hold some negotiating power.

There is a method to settling bad debts correctly and it depends on the type of debt;

• Old collection account- these should go through a process of validation of debt first, then be settled in writing. A lot of factors should be considered with this type of debt including the statute of limitations because debts DO expire.

• Past due credit cards- this type of debt is normally settled before it goes to a collection agency. You bargain with the original creditor to pay a portion of the debt and call it even and avoid collections.

• Deficiency balances (cars, etc.) - this type of debt is leftover from a repossession and is now unsecured. It can be settled for less because there is no security to take back. The creditor hopes to get it without having to take you to court.

Once you've determined the type of debt and action to take, you'll begin negotiating in writing. Do not negotiate by phone because it doesnt preserve your rights. You need a paper trail especially if the creditor has agreed to change your credit rating as part of the settlement.